Can I Have Two VA Loans at the Same Time? A Guide to Understanding VA Entitlement

As a Veteran exploring your home financing options you may be wondering if you can qualify for two VA loans at once. The answer is yes – under certain circumstances it is possible to have two VA-backed mortgages simultaneously.

Having two VA loans concurrently is usually associated with active-duty servicemembers who get Permanent Change of Station (PCS) orders. Instead of selling their current home, they opt to rent it out and use their remaining VA entitlement to purchase another property at their new duty station.

But how exactly does this work within the framework of the VA loan program? Can any Veteran qualify or are there limitations?

In this comprehensive guide, we’ll walk through the ins and outs of having two VA loans at the same time. We’ll cover:

• An overview of VA entitlement and how it enables repeat VA buyers
• Requirements and scenarios for qualifying for two simultaneous VA loans
• How dual VA loans impact your entitlement
• Tips for managing two mortgage payments
• Alternatives like restoration of entitlement

Let’s dive in!

What is VA Entitlement?

First, it’s important to understand the concept of VA entitlement. This refers to the amount of guarantee the Department of Veterans Affairs provides on a VA-backed loan.

Entitlement is essentially the VA saying they’ll reimburse the lender up to a certain dollar amount if the borrower defaults on a VA loan. This guarantee is what enables Veterans to qualify for 100% financing on a VA loan with no down payment in most cases.

There are two levels of VA entitlement:

• Basic entitlement – This is typically $36,000
• Bonus entitlement – Also called secondary entitlement, this is an additional $144,550 for most Veterans

Add those two tiers together and Veterans have access to $181,550 in total entitlement in standard VA loan limit areas. In more expensive housing markets, these numbers increase proportionally with the VA county loan caps.

Now, when you use your entitlement on a VA loan, the amount tied up in that mortgage is approximately 25% of the total loan amount.

For example, on a $200,000 VA loan, you’ve likely used up $50,000 of entitlement. Do some quick math and you’ll see most Veterans have around $131,550 left over after purchasing their first home.

This leftover entitlement is what enables Veterans to have two VA loans at once. Let’s examine how it works.

Requirements for Two Simultaneous VA Loans

The main requirement for having two active VA mortgages is that you intend to occupy both properties as your primary residence. At least temporarily.

Beyond that, here are some key criteria to qualify:

• Full entitlement – You’ll need your full VA entitlement unless you qualify for restoration or pay down the first loan
• Updating COE – Get a new Certificate of Eligibility reflecting available entitlement
• Lender approval – The lender must confirm you can handle both mortgage payments
• Occupancy timeline – Most lenders require living in the home for 12 months before renting

You’ll also need a compelling reason for needing two VA loans concurrently. Some common scenarios include:

• Active-duty PCS orders
• Building a new primary home while the current one sells
• Job relocation to a new area
• Utilizing a current home as a rental property

As long as you have sufficient remaining entitlement and can justify the purpose, qualifying for two simultaneous VA loans is feasible. Your lender will guide you through the specifics.

Now let’s break down the impact to your entitlement.

How Dual VA Loans Affect Your Entitlement

When you have two VA loans at the same time, your entitlement gets split between both mortgages. Here’s an example:

• Veteran has $181,550 in total entitlement
• First VA loan is $200,000
• 25% of $200,000 is $50,000 entitlement
• That leaves $131,550 leftover

Now let’s say this Veteran wants a second VA loan for $300,000. Here is how their entitlement would be impacted:

• 25% of $300,000 is $75,000
• $131,550 – $75,000 = $56,550 remaining entitlement

Because the VA guarantees 25% of the total loan amount, the Veteran could get a third VA loan up to approximately $226,200 (4 times $56,550) with zero down payment.

Anything above that limit would require a down payment to satisfy the 25% entitlement rule most lenders follow.

This demonstrates how you can utilize your entitlement for multiple VA loans, while also revealing the limitations as you approach zero entitlement.

Now let’s discuss managing dual VA mortgage payments.

Tips for Handling Two VA Mortgage Payments

One of the biggest challenges with having two simultaneous VA loans is actually being able to manage both monthly mortgage payments. Here are some tips:

• Rent out first home – Securing a tenant helps offset the payment on the rental property
• Sell within 12 months – If approved to buy before selling, sell ASAP to relieve payment strain
• Limit DTI – Keep total debt-to-income below 41% if possible
• Lower second payment – Opt for a lower loan amount on the second home if you can
• Automate payments – Set up automatic drafts from your bank account for each payment
• Build reserves – Have 9-12 months of mortgage payments saved as a backup

As long as you’ve budgeted accordingly and the lender approves, managing two VA loan payments is doable. Just make sure you have a plan.

Now let’s discuss an alternative option beyond using your available entitlement.

Restoration of Entitlement

Some Veterans considering two simultaneous VA loans don’t have enough entitlement due to their loan amount on the first home.

In cases where you’ve fully exhausted your VA entitlement, you may qualify for a one-time restoration.

Here’s how it works:

• Restoration provides you with 25% entitlement on loan amount up to $144,000
• So you can restore up to $36,000 in entitlement
• Can only be used one time in your lifetime

Restoration enables you to have full entitlement on a second loan up to $144,000 even if you used all of your entitlement on the first mortgage.

However, restoration still requires that loan to be paid off first. The funds cannot be applied to your current VA loan.

But for Veterans who need just a small amount of additional entitlement, restoration can be a solution. Consult with your lender to see if you qualify.

Alternatives to Two VA Loans

While having two VA loans simultaneously is possible for some Veterans, it’s certainly not the easiest path. Here are a couple alternatives to consider:

Sell Current Home

The simplest route is to just sell your current property when buying a new home. This automatically frees up your full entitlement for the new mortgage.

No need to juggle two loans or rely on restoration. If you don’t want the hassle of two payments, consider selling.

Cash-Out Refinance

Another option is to do a VA cash-out refinance on your current VA loan.

A cash-out refinance would give you equity you can use for a larger down payment on the new home. This reduces the loan amount and entitlement needed for the second purchase.

Just make sure you still have occupancy intentions on the second home. VA refinances require you to live in the property as your primary residence.

Pay Down Loan

If you have extra cash, consider making a principal paydown on your current VA loan before buying again. This recoups entitlement you can then apply to the second mortgage.

Just beware of early payment penalties and consult your servicer before making any large lump-sum payments.

Key Takeaways

While having two VA home loans concurrently sounds complicated, it is certainly possible if you meet a few key requirements:

• You must intend to live in both homes as primary residences

• You’ll need to have sufficient entitlement leftover after your first VA loan

• Make sure the lender approves you for handling both mortgage payments

• Have a compelling reason like PCS orders or using current home as rental

By understanding how your entitlement is impacted across two loans, and following the lender’s guidance, Veterans in certain unique circumstances can qualify for two VA-backed mortgages at the same time.

Just weigh the alternatives like selling, refinancing, or restoration of entitlement if meeting the dual loan requirements poses too much of a challenge. Your VA entitlement was earned through military service – make sure you maximize this benefit according to your family’s homeownership needs and goals.