Va Home Loan Entitlement
Rather than originating home loans, the Department of Veteran Affairs provides an entitlement to eligible individuals, which is a specific amount they guarantee to repay lenders if the homebuyer defaults on their loan.
You have full entitlement if you meet at least one of these requirements:
- 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 the VA in full.
While eligible veterans and active duty service members, and survivors with full entitlement no longer have limits on loans over $144,000, that doesnt mean you can purchase a multi-million dollar home! Your mortgage lender still needs to approve you for the home loan, which means meeting their eligibility requirements. Theyll review your credit score, credit history, income, and assets. Most mortgage lenders set their own VA loan limits, which are usually in line with the Federal Housing Finance Agency or conforming loan limits for each county.
VA home loans dont require a down payment, but you will likely pay a VA funding fee, which you can elect to roll into your VA home loan to pay off over your loan term. However,
To know whether you are eligible for a VA home loan and entitlement, you first must obtain a Certificate of Eligibility .
How Many Va Loans Can You Have At Once
VA Loans are by far the best home financing option for veterans and active-duty service members. With zero down payments and lower , its an affordable and accessible way to buy a primary residence home.
Millions of military personnel are purchasing their first homes or retiring their dream homes all across the United States. You can become eligible for these home loan benefits by meeting the service and financial requirements.
After you use a VA Loan, its understandable to want another one, especially if you have a large family. You could also be moving with a permanant change of station orders and not want the pressure of selling your current home first before you can apply for another VA Home Loan.
How many VA loans can you have at once? The simple answer to this question is as many as youd like. When a lender looks at your countys conforming loan limits and your entitlement, they can help you buy a home with a VA Loan.
You can even have 2 at once under certain circumstances. However, there are some things you need to understand about entitlements and lenders to successfully get another VA Home Loan.
Using Your Full Entitlement
If youve got your full entitlement to use, great! This indicates that either youre a first-time VA loan user, or youve fully paid off a previous VA loan. This means you have that full $36,000 entitlement amount. Because theres no limit on how many times you can use your VA loan benefit, each time you pay off a VA loan, that $36,000 is restored.
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How Many Times Can You Refinance With A Va Irrrl
Question:How many times can someone refinance their home with the VA Streamline program, sometimes called the VA to VA loan and also known as the IRRRL ?
Answer:As many times as it makes sense.When interest rates trend downward, as they have been doing for the past few years, it can make sense for someone to refinance their mortgage multiple times within a relatively short period of time.Example: If interest rates go from 7 percent to 4 percent over a 2 year period of time, it may make sense for someone to refinance their 7% mortgage to 6% and then 5% and then 4%. Of course, it might not make sense, but it might it really just depends on the numbers. A good loan officer will be able to show you the math equation and show you the savings.There is also a test that your loan has to pass, called a net tangible benefit test. The purpose of passing the test, is to be sure the benefits of refinancing outweigh the costs that are associated with refinancing.
As long as your loan passes the net tangible benefit test each time you consider refinancing, you can feel comfortable knowing the new loan is saving you money each and every time.
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Know Your Remaining Entitlement
If you would like to pursue the option of having multiple VA loans out concurrently, you will need to be aware of your remaining entitlement. The easiest way to obtain the exact amount of remaining entitlement is by pulling your updated certificate of eligibility. Many lenders can obtain this for you, or you can request it yourself online or by mail.
Now a few calculations. If you are eligible for the VA loan, you will obtain a mortgage through a lender, and then the VA will guaranty a portion of that loan. The VAs guaranty is equal to the lesser of 25 percent of the loan amount or 25 percent of the county loan limit. In most areas, the county loan limit is set at $417,000, but some counties with higher costs of living have higher loan limits.
If a buyer wishes to purchase a home above the county loan limit or above their available entitlement, their lender will likely require a down payment. The VA offers guaranty calculation examples for illustration purposes. Examples 4 and 5 show the calculations for situations where a down payment may be required.
How To Restore A Va Loan
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Whether you are moving to a new home or looking to purchase a second one, you may be wondering if you can use your full VA loan entitlement more than once. While the loan entitlement is limited, there are ways to restore it and extend your ability to buy without paying a down payment.
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Paid Mortgage In Full
Like I mentioned above, your full VA entitlement is restored when you pay off a previous VA loan. For example, lets say youve paid off your current VA loan but havent sold the house yet. You are still able to buy a second home with full VA eligibility. However, you cannot do so if your home was foreclosed on or if you have to surrender it in a deed in lieu of foreclosure. In order to get full entitlement restored, you do need to apply for it through the VA.
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.
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Can I Use A Va Loan More Than Once
Yes! Theres no limit to how many times you can use your VA loan benefit over your lifetime if you still meet the requirements of the VA and your lender. Your VA entitlement determines how much of your loan the VA will guarantee. Well look at that later.
Most of the time, your VA loan must be for either a purchase or refinance of your primary residence, so, for example, you wouldnt be able to use it to buy a vacation home.
For eligible borrowers who qualify with an approved lender, theres no limit as to how many times you can use your VA loan benefit in your lifetime. In some situations, it may even be possible to have more than one VA loan at a time, as well cover next.
Having More Than One Va Home Loan At The Same Time
The VA allows eligible veterans to have more than one VA home loan at the same time in certain situations. A second VA home loan is commonly called a second-tier entitlement. Veterans can use a second-tier entitlement if they seek to keep their current home and purchase another primary residence with the remainder of their current entitlement. Depending on how much of your current entitlement you have remaining, you may need to put additional money down to make up the difference between the total amount of your VA entitlement and the total of both mortgage balances. Active duty members who receive Permanent Change of Station orders may also qualify for a second-tier entitlement and have the opportunity to rent out their current home and purchase another home in their new location with their remaining entitlement.
VA home loans have lifelong benefits that help pave the way towards homeownership for those who have served our country. Discuss your plans with your VA mortgage lender to determine how to reuse your VA home loan benefits.
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Va Loan Paid Restore Entitlement Using Va Form 26
If you sell the house financed with a VA loan and pay the mortgage off you can get another VA loan. When this is done, you should complete VA Form 26-1880 to restore entitlement, the same form used to obtain Certificate of Eligibility , you can also apply online. Surviving spouses use VA Form 26-1817. When entitlement is restored you can apply for another VA loan.
Lets Look At Some Common Scenarios Experienced By Repeat Va Loan Users
I want to keep my house and the VA loan and buy another home with a VA loan
Check if you have remaining VA entitlement. If the home cost less than $144,000, you may have some remaining entitlement amount.
If theres no remaining entitlement, try refinancing out of the VA loan to another type of mortgage such as an FHA or conventional loan. Once you refinance and pay off the underlying VA loan in full, you may be able to keep the home and request a one-time entitlement restoration.
I own a home and had a VA loan on it but refinanced into another loan type. I want to keep the house and buy again with a VA loan.
You should be able to do this if you request a one-time restoration of your VA loan entitlement. This is the only time youll be able to request restoration if you choose to keep the original home.
I bought a home with a VA loan but sold the home and paid off the loan in full.
You are probably eligible to receive a restoration of entitlement. But you need to request it, because it wont be automatically restored. You can do this as many times as you want, as long as you sell the home and pay off the loan in full each time.
Im selling my home to an eligible veteran who is assuming my loan
Its fine, as long as the veteran substitutes their entitlement for the same amount of entitlement you used originally. Restoration of entitlement can be requested in this case.
I bought a home with a VA loan but sold it in a short sale/it was foreclosed
How Does This Affect A Military Spouse
A spouse can meet the occupancy requirement for married active-duty service personnel. The same holds for married veterans who work overseas as contractors or in other roles.
Single civilians working overseas or married veterans looking to buy property in a different area from their work may find it challenging to meet the occupancy requirement.
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.
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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.
Forfeiting Your Va Loan Entitlement Forever
Its possible for you to lose your VA loan entitlement permanently. This can happen if you default on your VA loan, the lender forecloses and sells your home for less than you owe, and the VA has to reimburse the lender.
In this scenario, the VAs payment to the lender is deducted from your entitlement, and you cant get it back. This is also true of a short sale, in which your home is sold at a loss.
Unfortunately, you cant use your one-time restoration of entitlement benefit in the case of a short sale or foreclosure.
However, you can regain your entitlement if you pay the VA back the losses from the foreclosure or short sale, Atapour adds.
With additional reporting by Erik Martin.
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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.
Manual Underwriting On Va Loans
Manual underwriting is when the automated underwriting system renders a refer/eligible which means the file may be eligible but needs to be downgraded to a manual underwriting where a human underwriter thoroughly manually underwrites the file. Manual Underwriting Guidelines apply. The answer to the question if the borrower with late payments in the past 12 months gets a refer/eligible per AUS can the borrower still qualify for a VA loan via manual underwriting is NO.
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Can You Use A Va Loan For A Second Home Or Investment Property
A second VA loan can be used to purchase a second house, but there are some restrictions. You must be entitled and financially eligible for the second VA loan. You must also show the VA that your second property provides a net tangible advantage.
These tangible advantages include but are not limited to:
- Closer proximity to your workplace
- An upgrade to a larger home
- Having to downsize
- Purchasing a home for your spouse that lives in another state
To be qualified for a second residence, you must have at least one net tangible advantage. These standards should not be too difficult to meet if you are a military member moving to a new state.