Understanding Your Va Loan Entitlement
Your VA loan entitlement is a lifetime benefit. This means you can use your entitlement to buy or refinance a home many times over the course of your life. You’ll need to meet the eligibility standards to qualify for a VA loan. You will also need to meet Freedom Mortgage’s credit, income, and financial requirements to have your loan application approved.
Have You Considered House Hacking
Owning your own home is the American Dream. The VA has made this easier through the ability to buy your primary residence with no down payment. There are VA guarantees on the loan, but you are still expected to make timely mortgage payments. Where will you get the extra cash? Consider rental property.
House hacking is the concept of renting out space to other people who pay you rent to live there. One easy approach is to buy a primary residence that is a duplex or triplex, also known as a two or three-family house. You rent out these two units. You are now a landlord. Their current monthly rent payment help you cover your mortgage payments.
Another strategy is to buy a house with extra bedrooms and take on roommates who pay rent to live in your spare bedrooms. You are sharing the kitchen and bathrooms. You will need to check on the legality of this arrangement in the town where you live.
How Often Can I Refinance My Va Loan
There is no limit to how many times you can refinance your VA loan, either with the IRRRL or a cash-out option. However, there is a minimum waiting period you need to observe before you can refinance.
You must wait at least 210 days from the date of the first payment you made on the loan you want to refinance, and you must have made at least six consecutive monthly payments.
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How Many Va Loans Can I Have At Once
Another common question we here is how many VA loans can I have at once? Is it possible to have multiple VA loans at one time? The answer is yes in the right situation. For example it is very common when an active duty service member has to move to a new service station or base. They often might have a tough time selling the old home and decide to use it as a rental property. Now that being said there are few things to keep in mind. In order to keep the current home and purchase a new home with no down payment you must have enough in your VA entitlement. It is also important to remember that anytime you purchase a new home with a VA loan that property must be the primary residence. So in the example above this is a situation where the Veteran could possibly keep the older home for an investment property and purchase a new home using his or her VA loan benefits. If you are considering or have questions about purchasing a second home with your VA loan benefits call 855 -956 -4040 to speak with a VA mortgage professional.
Va Loan For A Second Home: How It Works
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Sometimes moving is a fact of life for members of the military. In that case, you might be able to use a VA loan for a second home with the tier 2 entitlement or bonus entitlement benefits in order to take advantage of the benefits that the Department of Veterans Affairs offers popular benefits to enable military personnel and veterans, including the ability to buy without a down payment and more flexible income and debt requirements.
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Heres What You Need To Know About A Second Va Loan
If youve served in the U.S. military, you likely already know youre entitled to certain benefits. One of the most common is the VA loan, which can be used to purchase a home for no money down. The best part about all of this? You can use it more than once.
Lets take a look at how and when to use your VA loan as well as how many times you can take advantage of this product.
Can You Refinance More Than Once With Va Streamline
March 9, 2020 By JMcHood
Veterans have the option to refinance their current VA loan with little verification required. As long as your VA loan is current and there is a benefit for refinancing, you may qualify. But, what if you want to use the benefit more than one time? Are you able to do so?
The generic answer is yes, you can use the benefit as many times as you want. The trickier answer, however, is that it depends on the circumstances. The VA is very strict regarding the requirement regarding the need for a benefit to the refinance.
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Can I Get A Certificate Of Eligibility For A Va Direct Or Va
You may be able to get a COE if you didnt receive a dishonorable discharge and you meet the minimum active-duty service requirement based on when you served.
| When did you serve? | You meet the minimum active-duty service requirement if you served for at least this amount of time: | ||
|---|---|---|---|
| When did you serve? | Between August 2, 1990, and the present | You meet the minimum active-duty service requirement if you served for at least this amount of time: | 90 days of active-duty service |
| When did you serve? | Any time period | You meet the minimum active-duty service requirement if you served for at least this amount of time: | 6 creditable years in the Selected Reserve or National Guard, and one of the descriptions below is true for youAt least one of these must be true. You:
|
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.
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How To Get A Second Va Loan
If you have an existing VA loan, you can still get another in certain cases. You dont need to have full entitlement to qualify for a second loan in this case, youll have remaining entitlement.
There are plenty of situations in which you may need to get a second VA loan. One common situation is when a service member receives orders to a new station. For whatever reason, they choose not to sell their existing homewhich is financed by a VA loanand also want to purchase another property at their new duty station.
Other situations include when youve:
- Paid off the loan but still own the property
- Had a foreclosure and havent paid back the loan
- Refinanced the home with a non-VA loan
When using your remaining entitlement, the amount you can borrow depends on county loan limits. These limits match those set by the Federal Housing Finance Agency and will vary according to the cost of living in each area. The VA will either cover 25% of the loan limit minus the entitlement already used or 25% of the county limit, whichever is less.
This means if youre in a low cost-of-living area and you wish to purchase an expensive home, you may need to front your down payment to meet that 25% guarantee for your lender.
Does The Va Funding Fee Increase With Subsequent Use
The first time you use your VA entitlement, youll typically pay a one-time funding fee of 2.3% of the value of your loan, assuming you have a zero or very small down payment. So if you borrow $100,000, you have to pay $2,300 on closing. Alternatively, you can often add your funding fee to your loan amount and pay it down over the lifetime of your mortgage.
Though that might seem like a lot of money, its substantially less than what you would likely pay in private mortgage insurance for other low-down-payment loan types.
Some service members are exempt from the funding fee, including veterans with certain service-related disabilities and surviving spouses.
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How To Refinance A Va Loan
VA loans have never been more popular, so its no surprise that the number of VA loan refinances is surging as well. In 2020, the Department of Veterans Affairs backed a total of 818,394 refinance loans. In the first half of 2021 alone, it did another 600,000.
With the low interest rates of recent years, borrowers have been refinancing all-sorts of home loans. But for active duty members of the Armed Forces and veteran homeowners, it surely helps that refinancing a VA loan can be way easier and require less documentation than refinancing a conventional loan.
The VA doesnt serve as an actual lender. Instead, private VA loan lenders originate the mortgages and handle the application process. The VA home loan program guarantees a portion of the loan, which allows lenders to offer financing to borrowers with lower credit scores and without requiring a down payment.
It also means that VA lenders are required to offer what is sometimes called a streamline refinance. So, if you are refinancing a VA home loan in order to obtain a lower rate, you wont need to go through an appraisal process or submit documentation that the VA already has on file.
Youll have two options when it comes to refinancing your current mortgage:
Can I Use A Coe I Used Before
You may be able to restore an entitlement you used in the past to buy another home with a VA direct or VA-backed loan if you meet at least one of the requirements listed below.
At least one of these must be true:
- Youve sold the home you bought with the prior loan and have paid that loan in full, or
- A qualified Veteran-transferee agrees to assume your loan and substitute their entitlement for the same amount of entitlement you used originally, or
- Youve repaid your prior loan in full, but havent sold the home you bought with that loan
To request an entitlement restoration, fill out a Request for a Certificate of Eligibility and send it to the VA regional loan center for your state.
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Va Home Loan Overview And Advantages
What we know now as the VA home loan actually began with the 1944 Servicemens Readjustment Act. Among other benefits , this bill established the predecessor to the current VA home loan, increasing veteran homeownership via access to affordable mortgages.
Currently, the VA home loan offers the following key benefits, all of which make using the program a second time extremely appealing:
- No down payment required
- Streamlined refinance via the Interest Rate Reduction Refinance Loan
Va Loans After Foreclosure
If you lost a home in foreclosure and it had a VA loan on it, you lose that part of your entitlement. There is no way to get it back. For example, if you had a loan for $200,000 and you lost the home in foreclosure, that $200,000 in entitlement is no longer yours.
The good news is that you still have the $253,100 in entitlement that you can use when you qualify for a VA loan again. Usually, you have to wait at least 2 years before you can qualify.
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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.
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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How Many Times Can You Take Out A Va Loan
Qualifying veterans, active-duty service members and surviving spouses can use their VA loan benefit as many times as theyd like throughout their lifetime. As long as youre still eligible for a VA loan and are able to qualify with a lender, theres no limit to how many of these mortgages you can take out over the course of your life.
In fact, its even possible to have more than one VA loan at the same time in certain circumstances.
VA home loans are available to those who have served our country in the armed forces and, in some cases, their surviving spouses. There are many different types of VA loans and they come with many benefits, chief among them being that you dont need to make a down payment to purchase a home. Because the down payment is often the biggest hurdle to homeownership for borrowers, especially those who are first-time home buyers, VA loans can make homeownership much more accessible for those who qualify.
These loans are backed by the Department of Veterans Affairs . The VA doesnt issue these loans itself, but rather insures mortgages given by lenders. This reduces the risk to the lender, meaning that VA loans often come with more attractive terms than what youd get with other loan types, such as conventional loans or FHA loans.
The VA has different eligibility requirements for VA loans depending on when and for how long you served. You can learn more at VA.gov.
Why A Va Loan
The primary benefit of a VA-guaranteed loan is that it allows an eligible serviceman to purchase a house with no money down. Although interest rates are set by the private lenders that issue the loans, the guarantee encourages lenders to keep rates low and terms favorable. The VA appraisal performed on each home purchased with a VA loan helps to ensure that the home is safe and habitable. Today, more than 25 million veterans and active-duty personnel are eligible for VA-backed home loans.
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Eligibility Requirements For Va Home Loan Programs
Learn about VA home loan eligibility requirements for a VA direct or VA-backed loan. Find out how to apply for a Certificate of Eligibility to show your lender that you qualify based on your service history and duty status. Keep in mind that for a VA-backed home loan, youll also need to meet your lenders credit and income loan requirements to receive financing.
Gather Any Required Documentation
As with any other type of loan refinance, your VA lender will need you to present certain documents. For the IRRRL, that means the COE used in your previous VA loan.
For a cash-out refinance, the lender may ask for your W2s, 2 years worth of tax returns, and copies of pay stubs. Be sure to ask what other documentation may be required and get it together before applying.
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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.
