Is It Possible To Use A Va Loan More Than Once
If your family has outgrown your home and needs more space, you may be wondering: Can you use your VA loan twice? Luckily, the answer is yes. You can restore your full VA loan entitlement by selling your home or paying off the mortgage in full. Alternatively, you can also use the remaining entitlement amount from the purchase of your first property to buy a second home that better suits your needs.
However, there are certain VA loan requirements youll need to meet to take out a new mortgage. Heres a helpful, quick guide to all you need to know about reusing your VA loan.
Can You Use A Usda Rural Loan Twice
August 7, 2016 By Justin McHood
USDA loans were created to help low-income families be able to have suitable housing that they can call their own. The program is only available in rural areas of the United States, but that does not mean that it is not available in your area. A large majority of the United States is in a rural area, according to the USDA. They base their decision mostly on the population of the area as is determined by the census. If you are unsure which areas in your county are considered rural, consult the USDA website to see their boundaries you might be surprised to see which areas are considered rural and are eligible for this incredibly giving and flexible financing.
What Impact Does Death Or Divorce Have On Va Home Loans
Military members and veterans get divorced just like everyone else in the world. VA home loans are for the benefit of those who have served in the U.S. military. The spouse only has the benefit by association. When a veteran or service member has a civilian spouse, that spouse can participate in obtaining the VA loan. The income of the civilian spouse may be considered by the lender in determining the amount of the loan, and the spouse may be a co-signer on the loan.
If the couple later files for divorce, the VA loan issues can become a problem. The simplest solution is for the divorcing couple to sell the home and divide the proceeds. In that event, the veteran or service member can apply for restoration of VA loan eligibility. If the civilian spouse keeps the house, the spouse is technically in violation of VA occupancy regulations unless the house is refinanced with a conventional loan. So long as the civilian spouse remains in in the home, making payments on the VA loan, the veteran or military member will be unable to restore VA loan eligibility. Once the spouse pays off the VA loan or refinances, the veteran/service member can reapply.
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Va Loan Entitlement Restoration
You can use your VA loan benefit more than once. Much more than once, in fact.
Veterans and active duty personnel, as well as members of the Selected Reserves are eligible for another loan, at the same low VA loan rates enjoyed by first-time home buyers.
The following guidelines apply depending on whether you are keeping or selling your current home.
Pay The Loan Off In Full
Once you use your VA home loan benefit, you use whats called entitlement. Each veteran has enough entitlement to get a loan for $453,100. Since the VA doesnt require a down payment, many veterans can buy a home for just as much if they have full entitlement.
Once you use some of your entitlement, it remains tied to the home that you bought. For example, if you bought a $150,000 home, you would use up $150,000 of your entitlement. The entitlement remains with that home until you do two things pay off the loan in full and sell the home.
Notice that you cant just pay off the loan and release your entitlement. The VA requires that you also sell the home. If you do both things, you can have your entitlement reinstated. This allows you to go and buy another home using the entitlement again.
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Using A Va Loan After Default
Any entitlement tied up in a mortgage that you foreclose or otherwise default on will be lost, but that doesn’t always mean you can’t reuse your VA loan.
Imagine you buy a $200,000 home, using $50,000 of your entitlement. If you default on the mortgage, that $50,000 can’t be restored. But you’d still have $77,600 in second-tier entitlement left over.
Assuming that you meet lenders’ credit and waiting period requirements, you could use your second-tier entitlement to get a second VA home loan.
What Is A Va Loan Entitlement
Every Veteran and active service member who meets the VA’s service requirements has something called a VA loan entitlement.
Entitlement can be a bit confusing, even for those working in the mortgage industry, but the most common definition is that its a specific amount the Department of Veterans Affairs will repay a mortgage lender if the borrower fails to make their payments . This protection is called the VA loan guaranty.
Eligible Veterans in most parts of the country enjoy the following:
- Primary entitlement: $36,000
- Secondary entitlement: $68,250, available when buying a home for more than $144,000.
In more expensive housing markets, there are usually higher entitlement amounts.
Let VAMortgageCenter connect you with a home loan specialist to guide you through your entitlement questions and calculate your remaining entitlement.
When a qualified borrower purchases a home through the VA loan program, they use some or all of their entitlement. The VA typically guarantees a quarter of the loan amount, so borrowers usually utilize a quarter of their entitlement when purchasing.
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What Is My Basic Loan Entitlement
According to the Department of Veterans Affairs, the VA loan entitlement for each eligible Veteran is 25 percent of the loan amount. VA lenders typically loan up to 4 times the available entitlement without a down payment. This 25 percent rule is true in all parts of the country. A Veterans income and credit must qualify and the property must appraise for the sale price. You can use your basic entitlement to buy an existing home or purchase a new construction home.
Can I Get A VA Loan Without A Down Payment?
Yes, it is possible as a Veteran to get a VA loan without a down payment. But, you need to find a lender that is willing to do VA loans with no down payment. HomePromise is a unique VA lender able to finance low down payment VA loans. In some cases you can even purchase a home with the seller paying the closing costs so you have very little out of pocket cash required. So, if the other requirements are met then you can buy a home with minimal expense as long as you can comfortably make your mortgage payments.
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Can I Buy A Second Home With A Va Loan
You can use a second VA loan to get a second home but there are stipulations you must follow. As with the second VA loan, you have to have entitlement available, and youll have to be financially eligible for another mortgage.
On top of those requirements, you need to prove to the VA your second home provides a net tangible benefit.
Net tangible benefits include:
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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Disadvantages Of Va Loans
Every type of loan has drawbacks for some borrowers. Here are potential disadvantages of a VA loan.
VA loan funding fee: Although VA loans don’t require mortgage insurance, they come with an extra cost called a funding fee. The fee is set by the federal government and covers the cost of foreclosing if a borrower defaults. The fee ranges from 1.4% to 3.6% of the loan, depending on your down payment and whether its your first VA loan. You can pay the fee upfront or fold it into the loan.
Purchase loans only for primary homes: You can’t use a VA loan to buy an investment property or a vacation home.
Not all properties eligible: A VA-approved appraiser will evaluate the home you want to buy to estimate the value and make sure it meets the VA’s minimum property requirements. Some fixer-uppers may not meet the VA’s minimum standards.
What About Other Benefits
Luckily, there are other benefits a refinance can offer in order for you to take advantage of the VA IRRRL multiple times. While most borrowers benefit from a lower payment, some benefit from a new type of loan. For example, if you have an adjustable rate loan now, but want a fixed rate, its considered a benefit. The fixed rate loan is less risky for you and the lender than the ARM, which is why its a benefit.
It doesnt matter if the adjustable rate loan adjusted yet or if it wont adjust for a while. Just the fact that you are able to secure a more predictable program than the ARM provides is benefit enough. In fact, lenders dont even have to make sure you hit a specific threshold of savings. Where they do have to watch, though, is how much your payment increases.
ARM rates are often much lower when you first take out the loan. If your rate has not adjusted yet, you may have a lower payment than a fixed rate loan would provide. This means your payment may increase after the refinance rather than decrease. As long as the payment does not increase more than 20%, though, the lender can approve the VA IRRRL.
The ARM to fixed rate isnt the only program change the VA IRRRL can offer, though. You can also use it to change the term of your loan. Many borrowers use it to take a shorter term that helps them pay off their loan faster. Again, as long as the payment doesnt increase more than 20%, its eligible for the VA IRRRL program.
Do You Know if You Qualify?
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Using Your Remaining Entitlement
If you havent used your full entitlement yet, you may be able to take out a second VA loan to buy a new home without selling your current one. You can find out if youve used up your full entitlement by requesting a certificate of eligibility from the VA or doing a little math yourself.
To see how much of your entitlement is left, youll need to find the conforming loan limit for your county, which is available on the VA website. Conforming loan limits are the maximum mortgage amounts that government agencies like the VA are willing to back. Each county is assigned its loan limit to account for differences in the cost of living, so more expensive areas will have higher loan limits.
The maximum guaranty is also an essential factor to consider. It is the amount of your VA loan that is backed by the VA . Having that backing brings down the risk for lenders, enabling borrowers to borrow more at better rates.
Calculate your maximum guaranty by subtracting the portion of your entitlement that youve already used from 25% of the conforming loan limit, which is the portion of the loan that the VA will guarantee. So, for example, if the loan limit in your county is $510,400, the maximum guaranty you would qualify for is $127,600. If youve already used $50,000 of your entitlement, your maximum guaranty available will be $77,600. If you want to buy a more expensive home, youll need to save up for a down payment of 25% of the loan amount thats not covered by the guaranty.
When You Have Owned Multiple Properties
If you currently own property that was initially financed with a VA mortgage even if that loan was paid off in a sale or refinance it can occasionally cause a glitch when you apply for a new VA mortgage.
The VA says in its guidance to lenders to provide evidence that the prior loan has been paid in full with the application. Dig up those old documents before contacting a VA lender.
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Va Mortgage Entitlement Explained
VA loan entitlement is the amount of money the VA will guarantee on a home loan. This helps determine how much youre allowed to borrow before needing a down payment. Entitlement protection encourages lenders to offer VA loans with lower rates, no down payment and easier guidelines to qualify.
The entitlement amount is usually either $36,000 or 25 percent of the loan amount up to the conforming loan limit currently, $510,400 is the limit in most areas of the country, but its higher in some markets.
Eligible borrowers in most parts of the country have a primary entitlement of $36,000 and additional secondary entitlement of $91,600. That adds up to $127,600, says Sam Atapour, branch manager at Embrace Home Loans in Ashburn, Virginia.
When buying a home with a VA loan, some or all of this entitlement is used up in the mortgage. For instance, with a $200,000 loan, $50,000 of the entitlement is used. Say you want to carry two VA loans. The math is simple: $127,600 minus $50,000 of entitlement used on VA loan #1 equals up to $77,600 in entitlement that can be used for VA loan #2.
If you currently have a VA home loan, you may request a COE Certificate of Eligibility to learn if youre eligible to buy your next home with a VA home loan.
Can I Restore My Full Entitlement
Absolutely. Your VA loan entitlement is a lifelong benefit that you can use time and time again. The key is knowing how to restore your entitlement eligibility after buying a property. Lets take a look at your options.
How do I get my VA loan entitlement restored?
There are three ways to restore your full VA loan entitlement.
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How Many Times Can You Use A Va Loan
Editorial Note: The content of this article is based on the authors opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.
Military borrowers have an affordable path to homeownership with a loan backed by the U.S. Department of Veterans Affairs . You can use a VA loan multiple times as long as you meet the VAs eligibility requirements and receive a new VA loan entitlement. Its important to work with a mortgage lender who understands how VA benefits work so the process runs smoothly.
Can You Get A Va Loan More Than Once
December 24, 2012 By Eleanor Thorne
North Carolina Veterans may be eligible to purchase a new home with no down payment and not even realize it! We try to ALWAYS ask a potential borrower if they are eligible for a VA Loan, and we are constantly surprised when people say, Well, I served in the Gulf, but dont realize that this might qualify them for a VA Loan with no down payment!
Another group of people we talk to will say, Well, we used our VA Loan to buy a house in San Antonio. Okay did you SELL that house in San Antonio? If so, you can probably use your VA Benefits to get another VA Loan in Raleigh . More good news? If you still own that house in San Antonio you might STILL qualify to use your VA Loan benefits here in NC!
Many Veterans dont realize that there is actually no limit on the number of VA Guaranteed Home Loans a veteran can receive, and this answer often surprises veteran borrowers who have used the program before. In reality, a Veteran may qualify to borrow for a home using VA Loan benefits for a Second Home.
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Va Loan Assumed Entitlement May Or May Not Be Restored
if you sell your house before it is paid off the buyer can assume the VA loan. The buyer may use your entitlement to assume the mortgage. If this happens you can’t get another VA loan until your first one is paid off.
If you sell your house to a veteran they can use their entitlement to get a VA loan, if this is the case you are free to use your VA loan again.
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.
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