You’ll Need To Have Military Service
To even consider a VA loan, property investors need to be sure they meet the program’s military service requirements. That means you must be an active military member or veteran.
You also have to have clocked a certain number of days in the military, depending on when you served. The requirements are pretty specific based on whether your service was during wartime or peacetime, so check the charts at VA.gov to make sure you’re eligible before going further.
If you ultimately end up applying for a VA home loan, you’ll need a Certificate of Eligibility from the Department of Veterans Affairs.
Who Is Eligible For A Va Loan
VA loan eligibility standards differ depending on your status in the military. There are four primary categories that the Department of Veterans Affairs will assess your eligibility from. These categories are active duty, veteran, Military Reserves or National Guard, and military spouse. You can reference the VA loan program eligibility requirements here.
Your Va Loan Has Been Assumed By Another Veteran
Your entitlement can be restored if you sell your home to another VA home buyer. It is possible for them to use their entitlement to buy a home, freeing up your entitlement at the same time.
It can also be possible for a non-VA buyer to assume your loan. However, they must pay off the mortgage before your entitlement is restored.
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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.
Should You Have 2 Va Loans
Now the question is, should you have 2 VA loans at once? It depends on your circumstances. Most borrowers who do this have renters in the first home. They then use the rental income to help them qualify for the 2nd VA loan. Using rental income on a mortgage application is tricky, though. You must prove you have experience as a landlord. You must also prove the income will continue for the near future. An executed lease and claiming the income on your tax returns is the best way to make this happen.
Of course, every situation is different. Make sure you are comfortable with the rent you receive and that it covers your mortgage payment. Also, make sure you can conformably afford the 2nd mortgage. You should plan for the worst. What if your renters stopped paying? Could you afford both mortgages? This is the only way you could prevent default.
2 VA loans at once are possible. You must meet additional requirements, though. Talk to a few VA lenders to see what they have to offer. Not every lender will allow you to have more than 1 VA loan at a time. The VA does allow it in certain circumstances, though. Shop around and find a lender willing to provide you with the 2nd loan. Make sure you shop the various rates and closing fees too. This way you can save the most money on your 2nd VA loan. The 2nd time around, the VA charges a higher funding fee, so the loan will be more expensive. Consider those when deciding if 2 loans is a good idea for you.
Do You Know if You Qualify?
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Contact Your Lender To Get Started On Your Va Home Loan Application
As a VA lender since 2011, Capital Bank has over a decade of experience with helping members of our armed forces buy their dream home. Our lenders can answer any of your questions and guide you through the VA loan process. Our own process is transparent and intuitive to provide you with the smoothest path to closing your home and getting the keys!
About Second Tier Entitlement
The VA allows veterans to have two VA loans at the same time in some situations, and eligible veterans can qualify for a VA loan even if they’ve defaulted on one in previous years.
Don’t let anyone in the mortgage or real estate industries tell you differently. The key is something called second-tier entitlement. The time to act on your VA loan benefits again is now.
» MORE: Check if you meet the official VA loan requirements
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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.
Qualifying For A Second Home Loan
In order to qualify for a 2nd VA home loan, you and your home will need to meet the same requirements as for the first loan. Take a look at just a few:
- Certificate of Eligibility
- Many lenders require 620 credit score or higher but the VA simply lists suitable credit
- 41 percent DTI or lower
- Sufficient income
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What Is A Va Renovation Loan
A VA renovation loan, sometimes called a VA rehab loan, is a home loan that allows borrowers to include the cost of certain repairs or improvements in their loan amount.
This makes it possible for VA loan borrowers to purchase a home in need of repairs or upgrades without having to get a separate loan rather, the repair costs and purchase price are rolled into a single loan with one monthly payment. These loans can also be used to refinance an existing loan.
If You Want 2 Va Loans At The Same Time:
If you have not paid off your current VA loan and would like to apply for another VA loan, it is possible. To get a second VA loan to use for another home and not pay off your first VA loan, you must meet stricter guidelines than with a single use VA home loan .
The borrower may or may not have to make a down-payment.
To qualify for 2 VA loans, you must be able to afford the payments of both mortgages. An applicant is allowed to use rental income to offset the additional payment.
In either case, VA Home Loan Centers will initiate the restoration during the loan application process.
The process to get more than 1 VA loan is similar, yet slightly different that when you apply for your first VA loan. You must pass the requirements for VA loan eligibility. These requirements are the same for both the first use of the VA loan and each subsequent use.
Note that each time you use your VA loan benefit, you must pay an additional VA funding fee.
To get a VA loan, you must fill out the VA home loan application and receive funding from an approved investor.
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Have A Va Appraisal Completed
Your lender will work with you to schedule a home appraisal, which will be completed by a VA appraiser. This appraiser will determine the as-completed value, or what the value of the property will be after all repairs and improvements are completed.
This number is important. You can only borrow the lesser of the as-completed value and the acquisition cost .
Who Can Apply For A Va Loan
To qualify for a VA loan as a service member, veteran, reservist or National Guard personnel, you first must have served for a minimum required time period . You also must have been discharged or released under any condition other than dishonorable discharge.
The VA lists the specific length of service as follows:
- Veterans of World War II and the Korean Conflict: 90 days
- Post-World War II : 181 continuous days
- Post-Korean Conflict : 181 continuous days
- Vietnam Era service: 90 days
- Post-Vietnam Era : 181 continuous days
- Enlisted personnel from September 8, 1980, to August 1, 1990: 2 years
- Officers from October 17, 1981, to August 1, 1990: 2 years
- Gulf War Era personnel : 2 years or period called to active duty
- Active duty personnel: eligible after having served continuously for at least 181 days
- Reservists and National Guard personnel: 6 years
An unmarried surviving spouse of an eligible veteran who died as a result of service or service-connected conditions also is eligible for a VA loan, as is the spouse of an active-duty member who is missing in action or a prisoner of war.
Before applying for a VA loan, you must submit evidence of your military service to obtain a Certificate of Eligibility. Veterans typically need a DD Form 214, with the narrative reason for separation. Active duty personnel, reservists, members of the National Guard, discharged personnel, and surviving spouses need different paperwork. Visit the VA benefits website for details.
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Borrowing More Than Your Home Value With A Va Refinance
You dont need to be buying a new home to borrow more than your homes value.
If you currently own a home and want to refinance, you can borrow over 100% of the homes value but only in specific circumstances.
With a VA streamline refinance, you can borrow your homes value plus an additional $6,000. However, that additional money needs to go to specific areas.
Some of the areas you can put the money include:
- Heating/air conditioning
- Heat Pumps
- New energy efficient windows
The goal with this is to improve the home not just cosmetically but through efficiency. Making these changes can help reduce the costs of your energy bills as well. These changes are also available to normal VA loan home buyers.
Also, some streamline refinancers may be able to add their discount points to the refinance as well. Discount points are used to help get you a better rate, so by financing your discount points, you may be sacrificing a better rate. But this would allow you to refinance over 100% of your homes value.
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.
MilitaryVALoan.com is owned and operated by Full Beaker, Inc. NMLS #1019791
Can You Use A Va Loan For Investment Property
VA loans aren’t intended for investment properties, but there are ways around this rule.
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VA loans come with some serious benefits. Backed by the Department of Veterans Affairs, this handy mortgage program has no minimum, requires zero down payment, and offers 100% financing. It’s really one of the best loan options out there — at least for homebuyers.
But what about a real estate investor? Can you use a VA loan for investment property or multi-unit homes? Let’s dig in and see.
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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.
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.
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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.
Finding Your Homes Value
Before a lender will finance your home and approve your mortgage, theyll want to know the value of your home. To do this, they use a VA appraiser to assess the homes value.
VA appraisals are well-known for being more in-depth than other types of home appraisals, but thats a small price to pay when you can end up financing the entire value of the house. But the outcome of the appraisal is going to have a big impact on how you buy the house.
Lets say you want to purchase a home. You and the seller agree on $250,000, so you take the number to your lender. Theyll send an appraiser to check the value of the home and this can affect your loan eligibility.
If the appraiser comes back and says the home is only worth $230,000, your lender isnt going to be willing to approve your loan of $250,000. In this specific instance, you cannot borrow more than the home value. Youll be forced to negotiate for a lower price with the homeowner or find money to make up the additional $20,000.
But, if the appraiser comes back and agrees the home is worth $250,000 or more, then youre in business.
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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.
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.
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