One of the great things about the VA loan benefit is that you can use it multiple times to buy homes. There is no limit to the amount of VA home loans that veterans can use with the VA loan program; it is a life-long benefit. To secure an additional loan, your lender will look into your VA loan entitlement. The VA funding fee will go up slightly for you from what it was when you bought your first home.
What is the VA Funding Fee?
The VA funding fee goes to the Department of Veterans Affairs to help them keep the cover any losses on the loan and to keep their loan guarantee going. This fee can be rolled into your mortgage, but it will slightly increase your monthly mortgage payments. You can ask your seller to pay all or part of the funding fee on your behalf, and some sellers are willing to do this, but it is most commonly rolled into the mortgage.You are exempt from paying the funding fee if:
–You are receiving VA disability compensation or are entitled to it.
–You are in active service and have been awarded a Purple Heart.
–You are the spouse of a veteran who died in service or from a disability connected to their service.
How Much is the Fee?
The fee ranges from 0.5 percent to 2.3 percent of the total loan amount for a first-time borrower, though the amount can be reduced if they choose to make a down payment. For a subsequent home purchase, the fee is usually 3.3 percent, but it can also be affected by a down payment.
What is Entitlement?
All veterans and active service members who meet the VA’s loan eligibility requirements have entitlement. This is the amount of money the VA will pay the lender if the borrower defaults on the loan.Usually, the entitlement is approximately $36,000 the first time and a secondary entitlement of $68,250 for if the veteran buys a home that is over $144,00. When you use your VA loan, you are using that entitlement.
Can Entitlement be Restored?
If you use your entitlement, it can be restored when the loan is fully repaid, by submitting an application to the VA. To have your full entitlement restored, you have to sell the home for the original loan and pay off the mortgage. So long as you keep selling and paying off your previous VA loan, you can have your entitlement restored as many times as you want or need to.However, if the mortgage is paid off, you can use a one-time restoration benefit that will let you keep it as a vacation home or rental property.
Can I Have Two VA Loans at Once?
You can have two VA loans at the same time, usually, this is done because an active service member has a permanent change of station but wants to keep the old house. If you have enough entitlement left, you can then buy a new home at your new station.Another use of this is for a veteran who lost their home to a VA loan foreclosure, they may be able to later use their entitlement to buy a new home.