It’s possible to use a VA loan for a second home, but this process isn’t as easy as simply finding a lender and applying for another mortgage. There are quite a few different rules you’ll need to follow to ensure that you qualify. With that in mind, here’s a look at what you need to know before applying for a VA second home loan.
The VA home loan is an incredible program that allows eligible veterans, active-duty service members, and surviving spouses to purchase a home with no down payment. This valuable benefit has helped millions of military families realize the dream of homeownership.
But can you use a VA loan more than once? The short answer is yes! There is no limit to the number of times you can use your VA home loan benefit. As long as you have remaining entitlement, you can obtain multiple VA loans throughout your lifetime.
How VA Entitlement Works
The key to getting multiple VA loans is understanding how VA entitlement works. When you qualify for a VA loan, you are granted a certain amount of entitlement – essentially a guarantee from the VA saying they will reimburse the lender if you default.
The amount of entitlement granted depends on what county you are buying in, but it’s typically around $36,000 to $144,000. Whenever you use your VA home loan benefit, a portion of your total entitlement is allocated to that loan.
For example if you qualify for $100,000 in entitlement and purchase a $300,000 home roughly $75,000 of your entitlement would be used for that loan. This leaves you with $25,000 remaining that can be applied to a future VA loan.
You Can Use a VA Loan Multiple Times
Because entitlement is reusable, there is no maximum to how many times you can tap into your VA benefits. You could use a VA loan to purchase your first home, sell that home a few years later and restore your entitlement, then use a VA loan again to buy your second home.
This cycle can repeat multiple times throughout your lifetime The only limitation is that your total loan amounts cannot exceed the total entitlement amount you qualify for.
Many lenders have helped veterans and service members complete their 5th 6th, or even 10th VA loan! It’s a lifelong benefit that can be reused over and over as your family and housing needs change.
Options for Restoring Entitlement
If you want to maximize your VA loan usage, there are two primary ways to restore your previously-used entitlement:
1. Pay Off the Loan
The simplest way to regain entitlement is by paying off your existing VA loan in full. As soon as the loan balance reaches zero, your entitlement used on that loan will be automatically restored.
This allows you to purchase another home or refinance your existing home utilizing your full entitlement amount. Just be sure to obtain a new Certificate of Eligibility from the VA documenting your restored entitlement.
2. Sell the Home
The other way to recapture entitlement is by selling the home purchased with a VA loan. As soon as the sale is finalized and the VA loan is paid off, you can move forward with filing VA Form 26-1837 to have your entitlement restored.
Submit proof of your home sale along with the form, and the VA will generally restore your entitlement within 10 business days.
Occupancy Requirements Still Apply
While there aren’t limits on how many times you can reuse your entitlement, standard VA occupancy rules still apply when obtaining multiple loans.
In most cases, this means you can only have one VA loan at a time for a primary residence. The second loan must be for a new home you plan to personally occupy. Exceptions can be made if you are being relocated by the military or have extenuating circumstances.
The bottom line is that your VA home loan benefits can be reused as many times as needed throughout your lifetime. Pay off or sell your current home, restore your entitlement, and tap into your benefits again for your next purchase. With proper planning, you can maximize this advantage to buy and sell homes completely loan-fee free!
Frequently Asked Questions
How many VA loans can I have at once?
You can generally have two VA loans out at the same time – one for your current primary residence, and a second for a new home you plan to move into.
What if I already used all my entitlement?
If you’ve exhausted your total lifetime entitlement, you unfortunately cannot obtain any additional VA loans until the existing ones are paid off.
Can I get a VA loan for an investment property?
No, VA loans require you to personally occupy the home as your primary residence. They cannot be used for investment or rental properties.
What if I have bad credit or foreclosure history?
The VA loan program is more lenient than conventional loans. You can still qualify with credit scores as low as 580 and past foreclosures or bankruptcy.
Is it better to restore or apply for new entitlement?
Restoring entitlement is faster – new COE’s take 2-3 weeks versus 4-6 weeks for new entitlement requests. Always try restoring first.
Can I assume someone else’s VA loan?
Yes, VA loans are assumable with proper credit check and approval by the lender. The original borrower remains responsible too.
Ready to Reuse Your Benefits?
As you can see, VA loans are an amazing lifelong benefit that can be reused multiple times if managed properly. Ready to tap into your benefits again for a new home? The expert VA loan specialists at Veterans United are here to help. Give us a call today to explore your options!
You can transition your old home into a rental property
As mentioned above, it’s also possible to eventually transition your old home into an investment property and use your remaining entitlement to purchase a new primary residence. However, if you decide to go this route, you’ll have to meet some fairly strict underwriting guidelines, which include:
- Demonstrating prior experience managing rental units or having a background in property management
- Having at least six months of cash reserves on hand
- Sharing any lease agreements that are already in place
- Deducting 25% of your rental income from the qualifying amount as a vacancy factor
You can afford to manage two mortgage payments at the same time
If you still owe money on your mortgage and want to keep your existing property, it’s possible to transition your old home into a vacation home and use another VA loan to purchase a new primary residence.
In this case, you’ll need enough income to qualify to cover both mortgages at the same time. You’ll also be limited to partial entitlement (more on that later) on your new loan, which means you should be prepared to make a down payment.