Can I Have Multiple VA Loans? A Guide to Using Your Lifetime VA Home Loan Benefit Multiple Times

As a military servicemember or veteran, you have earned the right to use a VA home loan. This amazing loan program comes with perks like no down payment and no monthly mortgage insurance.

But did you know that VA loans are a lifetime benefit that you can use over and over again? That’s right – you are not limited to just one VA loan in your lifetime, You can have multiple VA loans at different times in your life as your needs change,

In this comprehensive guide, we will cover everything you need to know about getting multiple VA loans, including

• Can you have two VA loans at the same time?
• How VA loan entitlement works with multiple loans
• Tips for keeping your first home and buying another
• What happens if you default on a VA loan
• Funding fees for multiple VA loans
• And more!

Let’s dive in and explore how you can maximize your VA home loan benefit by getting multiple VA loans throughout your lifetime.

Can You Have Two VA Loans at Once?

A common question that comes up is whether you can have two VA loans open at the same time. The short answer is yes, it is possible under certain circumstances.

The most common scenario is an active duty servicemember who gets PCS orders (permanent change of station) to move to a new duty station. Rather than sell their home, they choose to rent it out and use their VA loan benefit to buy a new home at the new duty station.

In this case, the servicemember would need to qualify for both mortgage payments simultaneously, which could be challenging. But as long as they meet VA requirements for occupancy and credit, it is allowed.

Beyond PCS orders, the VA does not explicitly prohibit having two VA loans at the same time. But most lenders will have overlays in place that make it difficult to qualify for two mortgages.

The bottom line is that while legally allowed in some cases, practical hurdles like debt-to-income ratios will make it hard to have two VA loans open concurrently. But it can be done in special circumstances like a PCS move.

How VA Loan Entitlement Works for Multiple Loans

VA loan entitlement refers to the amount the Department of Veterans Affairs will guarantee on your loan in the event of a default. This guarantee is what allows you to get a VA loan with no down payment in most cases.

There are two tiers of VA loan entitlement:

• Basic entitlement: $36,000
• Bonus entitlement: $144,000

For a total possible entitlement of $180,000.

When you use your VA loan benefit, you tap into your entitlement. Typically 25% of the loan amount comes out of your total entitlement.

For example, on a $200,000 loan, you would use $50,000 of entitlement. This would leave you with $130,000 remaining for another VA loan in the future.

Your entitlement regenerates as you pay down or pay off your loan. So you can keep using your VA benefit time and time again if you have sufficient entitlement leftover from the previous loan.

This is how you can end up with multiple VA loans over a lifetime. Your entitlement will replenish with each new loan as long as you make payments on time and manage your debt wisely.

Keeping Your First Home and Buying Another VA Loan

One of the most common scenarios for getting multiple VA loans is keeping your current home and buying a new place with your remaining VA entitlement.

For example, maybe you get a job opportunity in a new city but don’t want to sell your house. Or perhaps you want to turn your current residence into a rental property for extra income.

In cases like this, you would tap into your “bonus” tier of VA entitlement to buy the new home. As long as you have sufficient entitlement leftover, you can qualify for another 0% down VA loan.

Here are some tips for navigating this scenario successfully:

• Update your COE (Certificate of Eligibility). You’ll need an updated COE reflecting your available entitlement for the new loan.

• Consider a lease-back agreement. This allows you to rent back your home from the buyers for a period after closing so you have time to move into your new place.

• Review VA occupancy rules. To use a VA-backed loan, you must plan to move into the new home as your primary residence within a reasonable timeframe. Discuss this requirement with your lender.

• Manage your DTI carefully. You’ll need to qualify for both mortgage payments, so debt-to-income ratios will be critical. Consider paying down debts or increasing your down payment to improve DTI.

• Get a property manager. Hiring a property management company to handle your old home as a rental can make the process smoother.

As long as you have remaining entitlement and can qualify for both mortgages, this approach lets you tap into your VA benefit multiple times.

What Happens if You Default on a VA Loan?

Defaulting on a VA loan does not necessarily preclude you from ever using the benefit again. However, there are some important impacts to understand if you go through foreclosure or end up in a short sale.

First, your entitlement takes a hit. The amount of entitlement used on the home you lost gets tied up indefinitely. The only way to restore it is to fully repay the VA for their losses. This repayment is called indemnification.

You may also face a waiting period before the VA will back a new loan for you. Typically this ranges from 2-6 years after the foreclosure or short sale date. The waiting period gives time for any credit damage to start healing.

Finally, your new VA loan may require a down payment if you don’t have your full entitlement anymore. With less entitlement, you may only qualify for a lower loan amount without a down payment.

While a VA loan default makes getting another VA loan trickier, it is still possible with proper planning. Talk to your lender up front about options to restore your entitlement and navigate any waiting periods.

The VA Funding Fee With Multiple Loans

Any time you tap into your VA benefit for a new loan, an upfront funding fee is due. This fee helps fund the program for other veterans. It does not count toward your down payment.

The current VA funding fee is:

• First-time use: 2.3% of the loan amount
• Subsequent use: 3.6% of the loan amount

So your second VA loan and beyond will incur a higher funding fee. However, the fee can be rolled into the loan amount so you don’t have to pay it out of pocket.

The exact percentage will vary between 2-3.6% depending on your down payment and other factors like military service. Be sure to account for this fee in your homebuying budget if you plan to get multiple VA loans.

Weighing the Pros and Cons of Multiple VA Loans

Getting multiple VA loans can be a smart move if used intentionally. But it’s not right for everyone. Consider these key pros and cons:

Pros

• Use your benefit multiple times
• Buy investment properties at 0% down
• Keep your current home and buy another
• Take advantage of low rates again

Cons

• Higher funding fee after first use
• Must manage multiple mortgage payments
• Entitlement can run out if not tracked
• Tougher approval after a default

As with any major financial move, think critically and talk to a loan officer before pursuing multiple VA loans. Understand how it will impact your specific situation.

Options Beyond Multiple VA Loans

One alternative to getting multiple VA loans is refinancing your current VA loan when rates drop to cash out equity or remove PMI.

With an IRRRL or VA cash-out refinance, you can tap equity with no appraisal and limited documentation. This avoids overlapping VA loans.

Similarly, a HELOC can give revolving access to your home equity for large expenses or renovations. No refinance is needed.

For home purchases, going with a conventional loan may make sense if you’ve used your VA entitlement and remaining entitlement won’t cover the full amount. Conventional loans come with pros like higher loan limits and typically lower rates.

Ready to Use Your Lifetime VA Benefit?

As a military borrower, you’ve earned tremendous home financing benefits like the VA loan. You can use this benefit again and again to purchase multiple homes over your lifetime.

Now you understand key considerations around having multiple VA loans open concurrently, how entitlement is restored, options after a VA foreclosure, and alternatives like the VA IRRRL refinance.

Our VA-specialized loan officers are here to consult with you on maximizing your VA loan benefit for life. We can pre-qualify you to see how much home you can afford. And provide tailored guidance based on your homeownership goals, income, assets, credit, and entitlement.

Let us help demystify VA loans so you feel confident using this hard-earned benefit to its full potential. Contact us today to start the conversation!