Can I Get A Second VA Loan? | How To Use Your Entitlement
Many homeowners who have used a VA loan before wonder if they can use the program again. After all, with its many benefits, the VA loan is often the best mortgage option available.
There are many myths and rumors surrounding VA loans, some of which deal with your eligibility for the program after you’ve already had a VA loan.
Here are some of the questions regarding VA loan eligibility after already using the loan program.Click here to see if you're eligible for another VA loan (Oct 3rd, 2022)
Can I use the VA loan more than once?
Yes, you can use a VA loan more than once. There are three different ways you can be eligible for another VA loan.
You’ve paid off your previous VA loan
If you have used a VA loan in the past and you’ve paid off your entire mortgage, then you should have no trouble getting another VA loan. You’ll still have to go through the entire application process, and you will have to restore your entitlement (which can be completed easily with a form).
It is important to note you need to restore your entitlement before you can apply for another VA loan.
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 amount is restored.
You haven’t used all your entitlement
Each VA member has a specific amount of money they’re “entitled” to through VA loans. But not all VA members use all of their entitlement when they purchase a home.
Entitlement is used when you purchase a home. As long as you purchase a home and borrow less than that amount, you should still have some entitlement available.
If this is the case, then it is certainly possible for you to have two VA loans out at the same time. However, this is not common, and you need to be able to qualify with income and credit just as you would with any other loan.Check your VA loan eligibility (Oct 3rd, 2022)
What is a VA loan entitlement?
A VA loan entitlement indicates the amount that the Department of Veterans Affairs is willing to guarantee on each home loan. With a VA entitlement, the veteran can work with the VA lender to determine how much they will be able to borrow without a down payment.
Essentially, this entitlement is a promise to a lender that the VA will cover any losses for up to 25% of the loan amount.
Depending on your circumstances, you may receive a full or reduced entitlement.
A full entitlement is available for eligible veterans and servicemembers. Your Certificate of Eligibility (COE) will provide information on the amount of your VA entitlement.
In the past, there was a full entitlement limit of $144,000 for a loan. But in 2020, the Department of Veterans Affairs adjusted the rules to remove VA loan limits, which means basic entitlement is no longer capped at $144,000.
In order to gain access to a full entitlement, you must meet one of these three requirements:
- You are an eligible veteran who has not used their home loan benefit.
- You are an eligible veteran who repaid your first VA loan in full and sold the property.
- You are an eligible veteran who had a foreclosure or short sale but repaid the VA in full.
If you’ve already used your VA loan benefit in the past, then you may still have access to a reduced benefit. A remaining benefit will vary based on the amount you’ve previously used and the county you live in.
You may be eligible for a reduced entitlement if you:
- You are an eligible veteran with a VA loan that you are currently repaying.
- You are an eligible veteran who has repaid a previous VA loan and still owns the home.
- You are an eligible veteran who has refinanced your VA loan into a non-VA loan.
- You are an eligible veteran who had a short sale and did not repay the VA in full.
- You are an eligible veteran who experienced foreclosure on a previous VA loan.
Even with a reduced entitlement, the VA loan can still be a worthwhile option for homebuyers.
Restoring your VA mortgage entitlement
Borrowers can go about restoring their VA mortgage entitlement in a few different ways, and for a variety of reasons.
If you want to restore your VA mortgage benefits, you can apply for a one-time restoration of entitlement. Through this process, you won’t be required to sell the property. However, you will need to repay the loan in full.
The form to kick off this process is the VA Form 26-1880. If you have questions about the document, don’t hesitate to reach out to your lender.
Can I have two VA loans at the same time?
Technically you can have two VA loans at the same time. But the only way for this to be possible is for you to have entitlement remaining after getting your first VA loan.
If you’re interested in getting a new home, the best approach is to make sure your first mortgage is paid off and your entitlement is restored. It can be difficult to be eligible for a second loan when the first loan is still open.
Funding fees for a second VA loan
If you take out a second VA loan, the funding fee is something to keep in mind. You’ll pay a higher funding fee if you plan to put down less than 5% on the home purchase.
Currently, veterans will pay a 3.6% funding fee when using a VA loan for the second time with a down payment of less than 5%.
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, they’ll 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 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 you’ll 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.” Essentially, this means that the loan must be in the financial interest of the veteran.
Net tangible benefits include:
- Eliminating monthly mortgage insurance
- Tapping into a shorter loan term
- Locking in a lower interest rate or monthly payment
- Refinancing from an ARM to a fixed-rate mortgage
At least one net tangible benefit needs to be met to be eligible for a second home.
There are plenty of ways homeowners can get a second VA loan. Once loans are paid off and entitlement is restored, there’s nothing to stop VA home buyers from using the mortgage program over and over.Click to check today's VA rates (Oct 3rd, 2022)
How to get a second VA loan
A VA loan can offer the affordable financing you need. If you decide to pursue a second VA loan, then you’ll need to start by determining what remaining entitlement you have.
The most efficient way to restore your VA entitlement benefits is to sell the first property you purchased with a VA loan. But you can also apply for restoration of entitlement benefits. Either way, you’ll need to clear up your entitlement options to pursue a second VA loan.
Once you’ve sorted out your entitlement options, then you can pursue a second VA loan with the help of a lender to guide you through the process.
Second VA loan FAQ: Frequently Asked Questions
The prospect of a second VA loan is enticing. Here are some answers to help you get started.
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.
Can I get a second VA home loan?
Yes, it is possible to get a second VA home loan.
When pursuing a second VA home loan, you’ll need to have enough entitlement leftover from your first-time use. Or restore your entitlement through one a number of ways. A few options include selling the initial property or proving a net tangible benefit.
Can you have two VA loans?
Yes, you can have two VA loans. As an eligible veteran, you’ll need to have some remaining entitlement or restore your entitlement to obtain a second VA loan.
Can you have two VA loans at the same time?
Yes, you can have two VA mortgage loans at the same time for two different primary residences.
For example, active duty service members that receive a change of station could obtain a second VA loan for a primary residence in their new location.
Can you have two VA loans in the same city?
You cannot obtain two VA loans in the same city at the same time. The issue lies in the primary residency requirement attached to VA loans. When you take out a VA loan, you’ll need to live in the property. With that, it would be difficult or impossible to take out two VA loans in the same city without repaying the initial loan.
How does a second VA loan work?
A second VA loan is based on your remaining entitlement. The Department of Veterans Affairs will guarantee up to 25% of the second loan. But you’ll have to pay a more significant funding fee if you plan to put down less than 5%.
Can I use a VA loan twice?
Yes, you can use the VA loan twice. There are several ways to tap into a second VA loan by enjoying your reduced entitlement or applying for a restoration of your full entitlement.
How long do you have to wait between VA loans?
You’ll need to wait on any new VA loans until at least 210 days have passed from the due date of your first monthly payment. Beyond that timeline, there are no specific waiting periods to be aware of.
How many VA loans can you have in a lifetime?
Technically, you can take out as many VA loans as you would like during your lifetime. However, you’ll need to keep your entitlement options in mind. Based on your remaining entitlement, you may not be able to tap into another VA loan until you sell the initial property you acquired through a VA loan.
Can I buy a second house with my VA loan?
VA loans are intended to provide affordable housing opportunities for veterans. With that, you’ll need to use the home as a primary residence. If you are seeking a loan for a second home, the VA loan is not a good fit.
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.
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 you’ve 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.
Can I refinance a VA loan?
The VA offers two refinance options, available exclusively to VA borrowers.
The VA Streamline Refinance — also sometimes known as a VA Interest Rate Reduction Refinance loan (IRRRL) — allows qualifying military borrowers to drop their interest rate quickly and affordably, often without an appraisal or income/asset verification.
The VA cash-out refinance allows qualifying military borrowers to convert their home equity into cash. Sometimes borrowers can access as much as 100% of the equity in their current home.
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 (PMI)
- No down payment requirement