Posted on: June 12, 2018
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 with 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:
Yes, you can use a VA loan more than once. There are three different ways you can be eligible for another 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 that you need to restore your entitlement before you can apply for another VA loan.
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.
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, and it goes toward your total loan limit – which, in 2019 is $484,350. 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.
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 that 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.
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 that 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.
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 that your second home provides a “net tangible benefit.”
Net tangible benefits include:
At least one net tangible benefit needs to be met to be eligible for a second home. But if you’re a military member getting reassigned to a new state, meeting these requirements shouldn’t be too difficult.
There are plenty of ways that 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.