How Can You Have Two Va Loans At Once
It’s not an everyday occurrence. But there are circumstances that allow veterans to have two or more VA loans at the same time. A common scenario involves a VA homeowner who has to relocate to a new duty station but wants to keep and rent out his or her primary residence. But veteran homebuyers can look to do this, too.
For example, let’s say you bought a $200,000 home at your current duty station and get PCS orders a couple years later. Rather than sell the home, you want to rent it out and buy again at the new duty station using your remaining entitlement.
Here’s how the math works, assuming you’re buying in another county with the standard VA loan limit:
$548,250 x 25% = $137,062 Maximum Guaranty
$137,062 – $50,000 = $87,062 Entitlement Available
$87,062 x 4 = $348,248 Maximum Loan Amount With No Down Payment
So, in this example, you could look to borrow up to $348,248 before needing to factor in a down payment. Anything above that amount would require a down payment of 25 percent of the excess.
Having a renter locked into a lease who will cover those old monthly payments can go a long way toward making this work.
» VA Loans: Get preapproved online
How To Prepare For The Va Coe Application
The VA has a comprehensive COE application page that will list out exactly which documents you will need to have present depending on your status within the military. If you are a veteran or surviving spouse, youll need a copy of you or your veteran spouses discharge or separation papers . If you are currently serving on active duty, you will need a statement of service signed by your commander or a personnel officer.
Two Va Home Loans At The Same Time
Many VA borrowers who buy ordinary family homes use way less than their full entitlement. And some can use whats leftover to acquire a second VA loan.
If youre posted away from your existing home in a permanent change of station , you can typically apply to use your remaining entitlement to purchase a different property close to where youre moving. And you can then rent out your existing home.
Sometimes, the remaining entitlement isnt quite enough to cover the loan required. But if you can scrape together a modest down payment, you can use that to bridge the gap.
The math can get complicated with this. If you think you may want to apply, you should talk to a VA mortgage loan specialist early on in the process.
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If You Have Full Entitlement You Dont Have A Home Loan Limit
Eligible Veterans, service members, and survivors with full entitlement no longer have limits on loans over $144,000. This means you wont have to pay a down payment, and we guarantee to your lender that if you default on a loan thats over $144,000, well pay them up to 25% of the loan amount. You have full entitlement if you meet either of the requirements listed below.
At least one of these must be true. Youve: Never used your home loan benefit, or Paid a previous VA loan in full and sold the property , or Used your home loan benefit, but had a foreclosure or compromise claim and repaid us in full
Note: You may have heard the terms additional entitlement, bonus entitlement, or tier 2 entitlement. We use these terms when we communicate with lenders about VA-backed loans over $144,000. You wont need to use these terms when applying for a loan.
It depends. If you apply and are eligible for a VA-backed home loan, youll receive a Certificate of Eligibility . This is the document that tells private lenders that you have VA home loan eligibility and entitlement.
But your lender will still need to approve you for a loan. The lender will determine the size of loan you can afford based on your: Credit history Income Assets
We dont require a minimum credit score, but some lenders may have different credit score requirements. Be sure to contact more than one lender to compare.
What Is A Certificate Of Eligibility
A certificate of eligibility shows a lender that you meet the service requirements to qualify for a VA home loan. You can typically get a COE as long as you didnt receive a dishonorable discharge and youve met the minimum active-duty service requirements, which vary depending on when you served. You may also be able to get a COE if youre the surviving spouse of a veteran.
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What Is My Entitlement
Your Entitlement is the amount of money the VA is willing to guarantee on your behalf to a private mortgage lender. The VA offers a basic entitlement of $36,000 to each Veteran. A lender is usually willing to loan you up to four times that amount or $144,000. If something happens and you are unable to pay back the loan, the VA will pay 25% of your loan to the lender as a guarantee. However, in many places across the country, its difficult to find a suitable home for $144,000. To ease this problem, the VA decided to link the amount it guarantees to the conforming loan limit for conventional financing as stated by the Federal Housing Agency . Doing that increased the amount available to veterans looking to buy a home. In most counties across the country, the VA will back 25% of your home loan, up to a maximum loan amount of $484,350 . In other words, if you finance a $250,000 home in a county with a limit of $484,350, you are only using a little over 50% of your entitlement.
The VA loan entitlement is yours for the duration of your life. It never expires, and you can use all of it or just some of it. You can even borrow more than the loan limit of $484,350, but most lenders will require some sort of down payment since the VA only backs 25% of the loan limit. Being able to use your benefit over and over is based on how much of your entitlement is available to you, and the reasons behind your wanting to use it again.
Youve Paid Off Your Previous Va Loan
If you have used a VA loan in the past and youve paid off your entire mortgage, then you should have no trouble getting another VA loan. Youll still have to go through the entire application process, and you will have to restore your entitlement .
It is important to note you need to restore your entitlement before you can apply for another VA loan.
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What Are The Fees Associated With A Va Loan
Fees? Who said anything about fees? Sorry, but even veterans must deal with some up-front costs.
To keep the VA home loan system afloat, there is a one-time funding fee. It varies, depending on the down payment and type of veteran. For instance, a borrower getting his/her first VA loan and making no down payment would pay a 2.15% fee on the amount of loan. The fee is 1.25% if the borrower makes a down payment of 10% or more.
Reservists and National Guard members usually pay about one-quarter of a percentage point more than active-duty personnel.
If youre using the VA loan program for a second time and have no down payment, the fee is 3.3% of the total loan amount. The fee is waived for veterans who received disability compensation.
Veteran Homeowners Arent Using Their Va Loan Benefits
Consider that there are about 19 million veterans in the United States. And 78% of veteran households are homeowners.
That makes for about 14.8 million veteran households in the country.
Yet, only 3.55 million eligible borrowers currently have VA loans.
Only 24% of qualified homeowners are currently using their VA loan benefits and 76% arent.
That means only around 24% of qualified homeowners are currently using their VA loan benefits and 76% arent.
Thats pretty astounding, given the unique benefits of a VA loan that are only available to veterans and service members.
Lets dig a little further into what those benefits are, and why veterans might not be taking full advantage of them.
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How Do Va Loans Work
There are two main categories of VA loans: VA direct loans and VA-backed loans. VA direct loans are serviced directly by VA. The sole VA direct loan is the Native American Direct Loan, which is only available to Native American veterans or service members buying, building, or refinancing a home on federal trust land. All other VA loans are VA-backed loans, meaning theyre serviced by private lenders but backed by VA. All VA loans must be serviced through a VA-loan approved lender who follows VA standards. Since a VA-backed loan is less risky to the lender, theyre more likely to have better terms or less stringent requirements.
One of the biggest draws of a VA loan is that it allows you to secure a loan with 100% financing, no down payment required. You also wont have to pay private mortgage insurance , which most conventional lenders require if you put less than 20% down. You will, however, need to pay a one-time VA funding fee.
Benefits Of A Va Loan
No down payment is required: If the military is moving you, they may cover the bulk of your moving costs, but youll probably still incur some expenses, or may not have the funds to make a substantial down payment. Your bonus entitlement may allow you to buy another home with very little, if any down payment.
Income tests are more lenient: The suggested maximum debt-to-income for VA loans is 41%, but the VA uses a different measure called residual income to qualify people for mortgages. This looks at how much money you have left over each month after your housing payment is made.
There is no credit score minimum: If there are some bumps in your credit on the road to your new homes destination, the VA doesnt require a minimum score for you to qualify. If you have bad credit due to your relocation, a VA underwriter may make an exception if you prove the late payments or collections occurred as you were relocating to a new duty station.
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If Youre In The Military An Eligible Veteran Or A Qualifying Spouse Of A Service Member You May Want To Look Into Getting A Va Loan When You Buy A Home
You can obtain a VA loan to buy a property thats your primary residence, even if youve already had a VA loan in the past. The government guarantees these loans, so its easier to qualify since theres little to risk for lenders. In fact, you can get a VA loan with no down payment and you may qualify even if your credit isnt very good and youve had a history of past foreclosures.
Unlike most mortgage options that dont require a big down payment, such as FHA loans, VA loans dont require you to buy mortgage insurance. There is a funding fee for most borrowers though, which adds to the cost of your mortgage.
While VA loans are often a great choice, the funding fee means these loans arent right for everyone. And since theyre issued by private lenders, youll need to shop around. If youre thinking about applying for a VA loan, heres what you need to know.
- Purchase and improve a home
- Make energy-efficiency improvements to your existing home
- Buy a lot and/or a manufactured home
- Refinance an existing loan
If youre eligible, VA loans are fairly easy to qualify for, since theres no down payment required, no minimum credit scores, and no maximum limit on how much you can borrow relative to income.
Is It Possible To Have More Than One Va Loan
Its very possible to have more than one VA loan at a time. A second home can be bought by using whats referred to as a Second-Tier Entitlement. The VA gives veterans a certain dollar amount known as an entitlement. So long as the maximum entitlement is not all used up, the individual can buy a second home with another VA loan.
The borrower will still have to qualify for the second loan with the lender. If the first mortgage was used for rental property, the borrower may need to show proof of rental income for the first property as well.
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How Much Entitlement Does The Va Provide
Entitlement can be confusing for even the most experienced mortgage professionals. But it really just involves a bit of math. In most areas of the country, basic entitlement is $36,000. Additionally, secondary entitlement is $70,025. Adding those together gives you a total of $106,024 for eligible veterans. In higher cost areas, it may be even more.Additionally, the VA insures a quarter of the loan amount for loans over $144,000. Therefore, you can multiply that entitlement amount, $106,024, by four for a maximum loan amount of $424,100. Thats the total amount qualified buyers could borrow before having to factor in a down payment.
Using A Remaining Entitlement
The VA guarantees a certain percentage of a mortgage’s loan amount and the veteran doesn’t have to use the entire entitlement at once. Even if you’re unable to restore your VA mortgage entitlement, you can still use up any remaining guaranty you have. For example, if you have $15,000 of your VA mortgage entitlement remaining after foreclosure, you can apply it to a new mortgage loan. Your remaining VA-backed mortgage guaranty may just be enough to convince a lender to approve your mortgage application.
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How Va Entitlement Works
Entitlement is credit that the VA awards to each eligible veteran. The credit is worth a specific dollar amount. When youre ready to buy a house, exchange your entitlement for a VA Guaranty.
Use the VA’s guarantee instead of cash for your down payment. If you have enough entitlement, you can buy a house with no money out-of-pocket. See How to qualify for a VA Loan.
To figure out your VA entitlement amount, check your VA Certificate of Eligibility .
The COE reads, “… the entitlement amount is 25% of the VA Loan limit.”
The VA Loan limit for 2019 is $484,350. Since the maximum entitlement amount is 25% of the VA Loan limit, your maximum entitlement amount is $121,087.
- $484,350VA loan limit
- X 25%
- =$121,087 Your entitlement available
You could go out and buy a house for exactly $484,350 and use up all your entitlement at one purchase.
You used only $75,000 of your $113,275 entitlement. You have $38,275 remaining entitlement.
- $113,275 Entitlement available
- =$38,275 Entitlement remaining
Bottom Line: Is A Va Loan Right For You
A VA loan may be a good choice if you dont have perfect credit, or you want to buy a home without a down payment but dont want to pay mortgage insurance. Just be aware that you need proof of military service to be eligible and youll likely have to pay a funding fee that could add significant cost to your loan.
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Using Your Remaining Entitlement
Now you know you have the entitlement left. How do you use it? How do you have 2 VA loans at the same time? You must meet specific circumstances.
If you are still active in the military and they move your base you may qualify. Some military members prefer to keep their current residence. They often rent it out and purchase another home closer to the base. This way when they complete their service at that base, they can move back to their original home.
Veterans may also use this option. The veteran must live in the home they purchase with the new VA loan. Keep in mind, the amount of the purchase price is also capped. They can only borrow up to 4 times the amount of the remaining entitlement. The exception to the rule is if the borrower puts money down on the home. Lets say you have $25,000 left in entitlement. This means a $100,000 mortgage. If you want to purchase a $150,000 home, youd have to put $50,000 down. This leaves you with a $100,000 mortgage. This may defeat the purpose of the VA loan, though, so it may or may not make sense for you.
Your Home Must Qualify For Va Loan
This is one of the harder aspects of VA loan restrictions to explain. Before you can purchase your home using VA loans, your property must qualify. The VA will send a specially appointed VA appraiser to assess the house. Here is a good breakdown of the VA property requirements but in general, your home must be a conventional home in good working condition.
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Am I Eligible For A Va Loan
If you have served in any active or reserve units of any military branch or National Guard branch, you almost certainly are eligible. Those who served active duty qualify after six months in the service those in the reserves or National Guard may apply after being enlisted for six years. If they are called to active duty, their eligibility begins after serving 90 days during times of war.
Spouses of military personnel who died on active duty or died from a service-connected disability or of a service member who is missing in action or a prisoner of war also are eligible if they have not remarried before reaching age 57.
Cadets at the U.S. Military, Air Force or Coast Guard academies and midshipmen at the U.S. Naval Academy also qualify, as do those who serve as Public Health Service or National Oceanic & Atmospheric Administration officers and merchant seaman with World War II service.