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.
Can I Have Two Va Loans
The unofficial slogan of VA Home Loan Centers is if you are up to date on your payments, following a short sale, we will get you in a home tomorrow. Under many circumstances, following a bankruptcy, foreclosure or short sale, a military member may qualify for a second VA loan. Veterans can use their home loan entitlements as many times as they want, providing that prior VA loans have been paid off, or if the veteran still has a remainder of their entitlement available. The VA entitlements are restored when prior VA loans are paid in full.
Beyond qualifying for a VA loan after previously using a VA loan, a prominent misconception exists regarding multiple loan uses at the same time, VA Home Loan Centers is constantly asked Can I have two VA Loans? The answer to this question varies depending on the situation, the amount of entitlement remaining and the loan amount.
Typical examples for an eligible applicant to receive a second VA loan in conjunction with the first include relocation to a new area as a result of Permanent Change of Station orders, upsizing or downsizing and essentially any factors resulting in a change of circumstance. If the individual wants to retain their home while purchasing a second home in the area of their new duty station, a possibility exists. For this to happen however, the individual must have a remaining entitlement amount following the usage of their first VA loan.
Other Stipulations To Use The Va Loan On Second Home
The bottom line Is that if you can articulate why you need to use the VA loan a second time to your lender, and they sign off on it, you will be in the clear! That being said, dont lie to your lender to game the game on this front. Mortgage Fraud is a real thingand a federal offensedont get wrapped up in it!
You should absolutely maximize your VA loan benefit, but do it ethically!
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How To Reduce Va Loan Funding Fees
Borrowers who make a down payment may be entitled to a reduction in their VA Loan funding fees.
A down payment of 5% will result in a first time funding fee of 1.5%, greater than 10% will be 1.25% of the loan.
The funding fees are the same for military members and veterans who use the VA Loan more than once.
Members of the Guard/Reserves may pay a 2.4% fee for first-time use with no down payment, a down payment of 5% but lower than 10% requires a 1.75% fee and a down payment of 10% or more comes with a 1.5% funding fee.
Guard/Reserve veterans using the VA Loan a subsequent time are required to pay a 3.3% funding fee if they are not making a down payment, a 1.75% fee for a down payment up to 10% and a 1.5% funding fee for a 10% or greater down payment.
How Va Loan Funding Fees Work On A Mortgage
For the calendar year 2019 and previous years, the VA Loan funding fee varies based on your qualifying service. Military members and veterans who qualify for the VA loan based on active-duty service have slightly lower funding fees. Starting in 2020, the funding fee will be the same regardless of service type.
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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 any of these requirements.
At least one of these must be true:
- Youve never used your home loan benefit, or
- Youve paid a previous VA loan in full and sold the property , or
- Youve 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:
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.
The Va Appraisal Is Too Conservative
The appraiser on a VA Home Loan is not going to give a lower value on a property than other types of financing. Its not what they do. Their job is to give a fair unbiased value on the home regardless of the type of financing. The appraiser also has to look for standard minimum property requirements which means their job is to make sure the property is safe and sound for you to buy. Unpermitted areas are not allowed, but there is a process of getting an exception to those areas from the VA office if a licensed contractor issues a letter stating the area appears to be built to code in a workmanlike manner. Condominium homes do need to be approved on the VA Condo Approved list, but if not on the list it is possible to get the Condominium approved by your VA Home Loan Specialist at Veterans Choice Home Loans.
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Can A Va Loan Be Used For A Second Va Loan
Yes, you can use the VA loan benefit to buy a home more than one time. However, veterans seeking a second VA loan will need to consider the various stipulations. The VA loan program was designed to help military borrowers get into primary residences, not to purchase vacation homes or investment properties.
One way to buy another home with a VA loan is to prove a net tangible benefit. These reasons may include moving closer to a new duty station or downsizing your mortgage payment due to a financial change.
Additionally, you may use a reduced entitlement to acquire a second VA loan. Or apply for a restoration of your entitlement to take out a second VA loan.
Beware Of The Higher Va Loan Funding Fees
Your first VA loan has a funding fee of 2.15% if you did not provide a down payment. Every VA loan after that has a funding fee of 3.3% funding fee. This is a fairly high fee, and for a $200,000 loan would be $6,600!
The fee applies even if you sold the first home and were not taking out two VA loans at one time. The fee can be financed into the loan, but I do not recommend it.
Lets say you purchase a home worth $200,000 and finance the funding fee of 3.3%. So your beginning loan balance is $206,600. With a 30 year mortgage at 3.0%, your loan balance in three years will be $192,874. With a 6% realtor fee you would need to sell for at least $204,500 to break even.
The way to avoid this fee is to put at least 5% down. At 5% down your funding fee drops to 1.5%. So from the last paragraph, if we put down 5% but finance the funding fee, our beginning loan balance is $200,000 + = $192,850.
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Can I Get A Va Loan After A Foreclosure
Foreclosures are never good for homeowners, but they will have no long-term impact on VA loan eligibility.
Before a home buyer can use a VA loan after a foreclosure, theyll have to wait two years. If the foreclosure was the result of a bankruptcy, the wait time could be different. Chapter 13 bankruptcies only require a one year wait while Chapter 7 bankruptcies require a two year wait.
If you short sale your home, you may not even be required to wait for your eligibility to return.
One of the big issues with a foreclosure is the hit credit scores can take. If scores fall too far, home buyers will have a difficult time finding a lender to approve their mortgage. Credit scores can take time to recover, and this can stretch out the process of getting a VA loan after a foreclosure.
Can I Use A Va Loan To Buy A Vacation Home
Because you can only use a VA loan for a primary residence, you cannot use a VA loan to buy a vacation home, unless you plan to spend the majority of the year there or you plan to live in the home upon retirement within the same year of purchasing it. However, one workaround is to use your old home as a vacation home and the new home as your primary residence. In this case, you would need to be able to keep up with both mortgages.
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How Many Times Can I Use A Va Loan
VA loans are not a one-time benefit you can use them multiple times so long as you meet eligibility requirements. You can even have multiple VA loans at the same time. Heres how it might work:
You sell your home and pay off the existing VA loan. Then you can either restore your entitlement or use your remaining entitlement to cover a new VA loan.
You can keep your current home and rent it out as an investment property. You could buy a second home using your remaining entitlement. This results in having two VA loans outstanding at the same time.
Youve repaid your previous VA loan in full but kept the sold the home you bought with it. In this case, you restore your entitlement, but you can only do this one time.
Is A Va Loan Worth It
The VA guarantee means that lenders can pass significant benefits along to military borrowers, including:
- Competitive mortgage rates
- No private mortgage insurance
- No down payment requirement
Please contact our support if you are suspicious of any fraudulent activities or have any questions. If you would like to find more information about your benefits, please visit the Official US Government website for theDepartment of Veteran Affairs or the US Department of Housing and Urban Development.
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What Is The Va Funding Fee
The VA funding fee is a percentage of the total loan amount, paid at closing, which enables the VA home loan program to be self-sustaining.
The amount of the funding fee will vary, based on the type of loan, the loan amount, the nature of your military service and the number of times youve used your VA loan benefit.
The VA funding fee can be financed into the total loan amount and paid down over the life of the loan.
If I Already Used My Entitlement How Can I Use It Again
To fully restore entitlement, a VA borrower must sell the home and pay off the loan in full. But there is one exception: If the mortgage is paid off, it is possible to use a one-time restoration benefit and keep the home for use as a rental property or vacation home.
One of the biggest benefits of the VA home loan program is that it lasts a lifetime. Even if a Veteran has used most or all of their entitlement to purchase a home, that entitlement can be fully restored once the loan is repaid in full. Just submit an application requesting your entitlement be restored.
To sum it up, there are two ways to restore your VA entitlement:
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Selling Your Home And Buying Another
Selling your home and buying another is the most common way to reuse your VA home loan benefit.
Let’s say you buy a $200,000 home, and the VA guarantees 25% of the loan amount, or $50,000. When you sell your home and pay off the balance, that $50,000 is freed up, and your full $127,600 entitlement becomes available.
What Are The Va Home Loan Limits By Year And County
Find the VA home loan limit for the county your property is in.
2022 VA home loan limits
VA home loan limits are the same as the Federal Housing Finance Agency limits. These are called conforming loan limits.
Scroll to the Previously Announced Loan Limits section
Review the table with past loan limit information.
Find the year with the limits you need
Years are located in the first column, labeled Description.
Refer only to the One-Unit Limit column in the table
This is the only column that applies to VA home loan limits.
Residual Income When Buying Your Second Home With The Va Loan
When you move out of your first residence and decide to rent it out, 75% of the gross rental income can be counted toward your debt-to-income ratio.
This is a nice touch because it means that your first home will actually help you qualify for the mortgage on your second VA loan purchase, as opposed to hurting your qualifications. The best thing you can do here is ensure the rental income you generate covers the mortgage payment on your first home.
Ideally, you want it to cover all of your expenses, but at least make sure it covers your mortgage.
This is why you need to buy your home as an investment, instead of just a home.
Can You Assume A Va Loan If You Already Have One
VA loans are assumable, which means that a veteran can allow a buyer to take over the mortgage. The buyer will need to meet the same income, occupancy, and credit criteria as the seller.
Veterans that assume the loan will need to use their own entitlement. With that, you may or may not be able to assume a VA loan if you already have one. The decision will hinge on your available entitlement.
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One Time Entitlement Recoup
If you sell your home, you can recoup your entitlement once. This isnt an automatic process though, like some people believe it is.
The restoration process needs to be done by the veteran, and the paperwork can be done online or by filling out a Request for COE to the regional VA processing center.
How Va Loan Entitlement Works
Since 2020, the Department of Veterans Affairs has not imposed any formal loan limits on VA loans. This means you can borrow as much as you want using a single VA loan, providing you can prove you can comfortably afford the monthly payments, are a responsible borrower , and have whatever assets your private lender requires for the loan amount you want.
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What You Need To Know When Someone Assumes Your Va Loan
VA loans are assumable which means someone buying your home can take over a great interest rate in addition to buying your home. The important thing to remember is your entitlement wont be restored unless the buyer is an eligible veteran who agrees to substitute his or her eligibility for yours. However, the VA doesnt restrict who can buy your home or assume your current VA mortgage. If you decide to sell a house to a non-military buyer, even if they take over responsibility for the loan payment through an approved loan assumption, some of your VA entitlement will be tied up in the property until the loan is paid in full.
How To Get Second Va Loan
Getting a second VA loan will likely feel quite similar to your first VA loan. Heres a rundown of the key steps involved:
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