If you want to use a VA loan for second home, there are a few factors you will need to consider. To be honest, there are more than a few factors. On the plus side, it is possible to get a second home with a VA loan guarantee. On the minus side, it’s not as straightforward as you might hope. That’s because the VA loan program is designed primarily for one thing: to help active military service members and veterans afford a home. And it’s very, very good at that – one of the best government programs for housing. If you want it to do two things, such as purchasing multiple houses, it is less clear. That’s Ok if you don’t mind doing a little homework (pun intended).
If you are careful, you can buy two homes using your VA benefits. It’s not illegal, but you do need to acknowledge and abide by the VA’s policies. That means understanding rules about occupancy, entitlement, and eligibility. And have a calculator ready because you might need to do some math.
Purchasing a home is one of the most significant financial decisions someone can make in their lifetime. For veterans and active-duty military personnel, VA home loans offer unique benefits like 100% financing and flexible underwriting to make homebuying more accessible
But what if you already have a VA loan and are hoping to buy a second property? Can you use a VA home loan again or are you limited to one?
The good news is you can use a VA loan more than once to purchase additional homes throughout your lifetime. However, there are specific guidelines and eligibility criteria borrowers must follow to qualify for a second VA mortgage.
In this comprehensive guide, we will cover everything you need to know about getting approved for a second VA home loan.
Can I Use A VA Loan For A Second House?
Yes, it is possible to purchase a second home with a VA mortgage if you meet certain requirements. The VA does not limit borrowers to just one VA loan.
However, second VA loans are subject to different policies regarding VA entitlement, occupancy, and eligibility based on your status with the first home.
Let’s break down some common scenarios:
If You Are Selling Your First Home
If you sell the property you purchased with your initial VA loan, the process of getting approved for a second VA mortgage is straightforward.
Selling and satisfying your first VA loan releases your entitlement to be restored and used on a new loan. As long as you request an updated Certificate of Eligibility from the VA, you can purchase another home with 100% financing.
If You Are Keeping Your First Home
Situations get more complicated if you wish to keep your existing home and purchase another with VA financing. In this case, you would need to rely on your remaining entitlement for the second loan.
Most lenders require at least 25% of the loan amount be covered by available entitlement to offer 100% financing on a second VA loan. If you don’t have enough entitlement, a down payment may be required.
You’ll also need to show you can afford both mortgage payments simultaneously. And similar to the first loan, you must intend to occupy the second home as your primary residence.
VA Entitlement Explained
VA entitlement refers to the amount of your loan that is guaranteed by the Department of Veterans Affairs. This guarantee serves as an insurance policy for lenders in case the loan defaults.
Here are some key facts about VA entitlements:
- Each eligible borrower has a basic entitlement of $36,000
- Your entitlement can be restored if your first VA loan is paid off through sale, refinance, or foreclosure claim
- Additional entitlement above $36,000 may be awarded based on the loan amount
- Entitlement is attached to the property, not the borrower
- You can only restore entitlement once in your lifetime
Understanding how much entitlement you have remaining is crucial when purchasing a second home with VA financing. Let’s take a closer look at how VA entitlement is calculated.
Understanding And Calculating VA Entitlement
As mentioned, the basic VA entitlement provided to eligible borrowers is $36,000. This number is based on the VA covering 25% of a $144,000 loan.
If your loan amount exceeds $144,000, you may receive “bonus entitlement” to cover 25% of the higher loan amount. Bonus entitlement is capped at 25% of the VA county loan limit for your area.
For example:
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Veteran A purchases a $200,000 home
- Basic entitlement: $36,000
- Loan amount minus $144,000 = $56,000
- 25% of $56,000 = $14,000 bonus entitlement
- Total entitlement = $36,000 + $14,000 = $50,000
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Veteran B purchases a $300,000 home in a county with a $520,000 VA limit
- Basic entitlement: $36,000
- Loan amount minus $144,000 = $156,000
- 25% of county loan limit ($520,000) is $130,000
- Bonus entitlement is capped at $130,000
- Total entitlement = $36,000 + $130,000 = $166,000
When applying for a second VA loan, the calculations get more complex. Your total available entitlement will be your existing entitlement minus any amount previously used to purchase your first home.
Lenders will compare 25% of the new loan amount to your remaining entitlement and base financing terms on whichever figure is lower. This helps ensure the second loan is guaranteed sufficiently by the VA.
Let’s look at some examples of how this works:
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Veteran A has $50,000 total entitlement from first home
- Purchases second $250,000 home
- 25% of new loan amount is $62,500
- Remaining entitlement from first loan is $50,000
- VA will only guarantee $50,000
- Veteran A has two options:
- Put down $12,500 to cover difference
- Take out a second lien for $12,500
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Veteran B has $166,000 total entitlement from first home
- Purchases second $400,000 home
- 25% of new loan is $100,000
- Remaining entitlement is $166,000
- VA will guarantee full $100,000 (25% of new loan)
- Veteran B can get 100% financing
As you can see, understanding your current VA entitlement and how it carries over to a second loan is key to knowing your financing options.
How To Check Your VA Entitlement
Checking your available VA entitlement is easy with a few simple steps:
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Request your VA Certificate of Eligibility. This certificate will list your basic and bonus entitlement amounts.
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Check entitlement used on your first loan. Refer to your closing disclosure or contact your servicer.
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Subtract the amount used from your total. This gives you your remaining entitlement for a second VA loan.
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Ask a VA lender to pre-approve you. They can confirm exactly how much entitlement is available.
Checking with a knowledgeable VA lender early in the process is highly recommended. They can guide you through any nuances and ensure you use your benefits correctly.
How Soon Can I Get A Second VA Loan?
There is no minimum waiting period to get a second VA home loan after purchasing your initial home. However, most lenders require you to have made 6-12 months of mortgage payments before approving a second loan.
Meeting VA occupancy requirements may also impact timing. Borrowers must move into the home within 60 days and occupy it as their primary residence.
This helps prove you genuinely intend to live in the second home you purchase with VA financing. Renting out the property too quickly after buying could be flagged by the VA as misuse of benefits.
Outside of those guidelines, the timing comes down to your personal finances:
- Does selling or keeping your first home work better?
- How soon can you pay off the first loan or build up equity?
- Will your finances support two mortgage payments if keeping the first home?
Answering these questions will help determine if buying a second property with VA financing makes sense for your situation.
Can I Rent Out My First VA Loan Home?
Yes, it is possible to rent out the property you initially purchased with a VA loan. However, there are usage requirements to follow:
- You must occupy the home for at least 12 months before renting it out
- Your VA lender must approve converting the home to a rental property
- You will need to qualify for the second mortgage based on the rental income
Since VA loans require borrowers to occupy the home, you cannot immediately buy a property to use solely as a rental. But converts are allowed after meeting the above criteria.
Tips For Getting A Second VA Mortgage
If you’ve determined a second VA loan fits your homebuying goals, here are some tips to streamline the process:
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Shop lenders who specialize in second VA loans. Make sure they understand the nuances and guidelines. Veterans United is a top VA lender for repeat buyers.
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Check your entitlement early. Knowing exactly what you have to work with makes the rest of the process easier.
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Line up your finances. Review income, assets, debts, and credit to ensure your profile fits VA requirements.
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Consider selling the first home to recapture full entitlement and remove any barriers.
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Manage timing with care. Don’t rush into a second purchase before you meet all VA occupancy rules and lender requirements.
With the right lender guiding you, a second VA loan can be a smooth process. You’ve earned this powerful benefit, so take advantage of it wisely.
Alternatives To A Second VA Loan
Although purchasing another home with a VA loan is an excellent option, it is not the only one. Veterans and service members should also consider:
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VA Streamline Refinance – If you want to keep your first home but need to lower the monthly payment, an IRRRL refinance may help. You can refinance into a lower rate without an appraisal or credit check.
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Conventional Loan – If you have significant equity or assets to make a down payment, a conventional loan may provide more flexibility. No occupancy or entitlement requirements to navigate.
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Selling to a VA-Eligible Buyer – This allows you to sell the property to another veteran who can assume the loan. A smooth transition while recapturing your full entitlement.
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Cash-Out Refinance – Could provide funds needed for a down payment on a second home. However, costs are higher, and you take on more debt.
Look at both VA and conventional options to find the best financial solution aligned with your homeownership goals.
The Bottom Line
Purchasing a second home with VA financing is certainly possible with proper planning. Following the guidelines around entitlement, occupancy, and timing are key to successfully qualifying for another VA loan.
While the process involves more steps compared to getting a conventional second mortgage, VA loans continue providing valuable benefits like no down payment or PMI.
Hopefully this guide provides the details you need to make an informed decision about using your VA entitlement for a second time. Finding the right lender to guide you through the process is critical as well.
At the end of the day, you’ve earned the right to use your VA home loan benefits more than once. Take advantage of this hard-won opportunity to own multiple properties and expand your financial stability.
Can You Use the VA Loan to Buy a Vacation Home?
The general answer is no, but again it’s a matter of timing. If you go out with the intention of buying a new home as a vacation home, that’s a no. But, if you buy a new home and you want to use your previous home as a vacation home, there’s nothing in the way of you doing that. You just need to make sure the new home is your current home, meaning your primary residence. Also if you are close to retiring from the military, you might want to purchase a home that would be in a vacation destination. In that case, you have 12 months to move in, but it will need to become your primary residence once you retire.
Timing is Everything: Occupancy Requirement
Occupancy is the first hurdle. The U.S. Department of Veterans Affairs requires that when you apply for a VA loan guarantee, it must be for the residence that will be your primary home. In terms of timing, buying a second property with a VA loan really means that you are buying a primary residence, leaving your previous home as your “second home.” Let’s say that again: your old house is now your second house and your new house is the one you will live in, i.e. your primary house. This is completely legit, but you can see where timing is critical. If you plan on using your benefit for a second VA loan guarantee, you can’t buy a second home and not live in it.
This is a good place to pause and remind ourselves that the VA guarantees the loan but doesn’t actually lend the money. That comes from VA-approved lenders or private mortgage brokers. The VA’s insurance, however, is a very strong card in your hand. It tells the lender that the VA is backing your loan, and lenders take that kind of insurance seriously. They don’t typically like risk, and you are a lot less risky with the VA on your side.
The whole idea of using the VA loan for second home is contingent on your ability to make the mortgage payments on both properties.
In terms of occupancy, you need to move into the new house within 60 days. The occupancy rules have some exceptions because sometimes, due to deployments or retirements, the new owners can’t move in right away or may be away from the residence. These exceptions are:
- Retirement – If you want to buy a home somewhere well in advance of your actual retirement day, you have up to a year to move in.
- Fixer Upper – If the house needs repairs or renovations that will take longer than 60 days, you can get an exception.
- Spouses – If your spouse moves into the home while you are deployed, that counts.
- Work Away from Home – If your job takes you away from home, you can ask for an intermittent occupancy exception.
- Unusual Circumstances – Talk to your loan officer about other obstacles to your occupancy.
VA Loan Secrets: What Veterans MUST Know about Using Multiple VA Loans (updated 2023)
FAQ
Can VA be used to buy a second home?
Can you use a VA loan for a second mortgage?
Can I get another VA loan if I already have one?
How long do you have to wait to get a 2nd VA loan?
Can a VA loan buy a second home?
Yes, you can use a VA loan to buy a second home, but you will need to follow certain requirements. In lending and in life, the main definition of second home is a vacation home that serves as a getaway from the everyday hustle and bustle.
Can a veteran buy a second home with no down payment?
If a veteran wants to use a VA loan to purchase a second primary property with no down payment, you typically have to have enough entitlement left over to cover 25% of the overall loan amount because that’s what the VA would guarantee on the first loan.
Can you buy a home with a VA loan that doesn’t occupy?
Because VA loans are intended to help people purchase or refinance a primary residence, you will have to follow the VA loan occupancy requirements. This means you can’t legally purchase a home with a VA loan that you don’t intend to occupy for most of the year.
Should I get a VA mortgage if I have secondary financing?
If you have secondary financing for the purpose of utilizing your equity, it’s worth noting that with a VA mortgage, you can get a primary mortgage up to the total value of your home. This could help you get a lower rate than you otherwise might with a second mortgage, such as a home equity loan or HELOC.