Can You Get 2 VA Loans? Everything You Need To Know

Getting a mortgage through the VA home loan program can be an excellent way for eligible veterans and service members to purchase a home with little to no down payment But what if you already have a VA loan and want to buy another home – can you get a second VA mortgage?

The short answer is yes, you can get approved for 2 VA loans under certain circumstances. While there are some limitations, qualifying veterans can utilize their VA home loan benefit multiple times.

How Many VA Loans Can You Have at Once?

The VA doesn’t impose a hard limit on the number of loans you can have. However, there are practical restrictions that prevent most borrowers from holding multiple mortgages concurrently.

You can only have one VA-backed loan on a single property. If you have an existing VA mortgage and want to buy a new house for yourself, you typically need to sell the initial home first. This releases the VA entitlement you used, allowing it to be restored and reused on another purchase.

But there are some scenarios where you may be permitted to have 2 active VA loans simultaneously:

• Two separate primary residences: Active duty service members who receive PCS (Permanent Change of Station) orders can sometimes obtain approval for two VA home loans. Rather than sell their initial house, they choose to rent it out and use remaining entitlement to buy again at the new duty station.

• VA refinance: When refinancing an existing VA loan, the initial mortgage is paid off and replaced with a new loan. During the brief overlap period, you temporarily have two VA loans until the first one is closed out.

• Cash-out refinance: A VA cash-out refinance allows you to tap your home equity by replacing your current VA mortgage with a larger loan. This results in having two loans at once for a short time.

• IRRRL refinance: Also known as a VA Streamline Refinance, an IRRRL refi lets you lower your interest rate and payment by refinancing your current VA loan into a new one. As above, you’ll temporarily have two loans.

VA Entitlement and How It Works

When considering if you can get 2 VA mortgages, a key factor is your remaining VA entitlement. Here’s an overview of how entitlement works:

• Entitlement refers to the amount of your VA home loan that is guaranteed by the Department of Veterans Affairs. This guarantee encourages lenders to offer VA loans.

• The standard VA entitlement amount is currently $36,000. However, this can be higher in certain counties due to elevated home prices.

• Each time you use your VA loan benefit, your entitlement is reduced by the amount utilized for that purchase or refinance.

• Once you sell a home purchased with a VA loan and pay off the mortgage, your entitlement is restored so you can reuse it.

• If you have an existing VA mortgage, you have partial entitlement based on the amount you already used. The remainder is available for a second home purchase.

• You can request a one-time restoration of entitlement in some cases if you still own the initial home. This allows you to reuse entitlement while keeping the first property.

So in short, VA entitlement starts at the maximum, is tapped by each use, but can be replenished by selling, restoring through a special request, or refinancing. Carefully tracking your entitlement is crucial when seeking 2 VA home loans.

Qualifying for a Second VA Mortgage

To be approved for a second VA-backed mortgage while keeping your initial VA loan, you’ll need to meet these key criteria:

• Have sufficient entitlement: Your total entitlement use across both loans cannot exceed the maximum amount you qualify for.

• Get lender approval: The lender must confirm in writing that you can handle both mortgage payments simultaneously.

• Occupy one home: At least one property must be your primary residence. The second can be a rental but cannot be vacant.

• Prove rental income (if applicable): If renting out the first home, you’ll need a signed lease agreement and evidence of regular rental payments.

• Meet VA overlays: Lenders often add credit score, debt-to-income, and other VA loan requirements. You must satisfy the strictest overlays.

• Pay higher VA funding fee: On a second use of VA loan entitlement, the funding fee rises to 3.3% unless you make a down payment over 5%.

Overall the key is to ensure you have enough entitlement left while also demonstrating the capacity to manage payments on both mortgages. It’s allowed with proper approvals, but isn’t easy to pull off.

Steps to Get a Second VA Home Loan

If you’ve determined a second VA loan is possible for your situation, follow these steps to move forward:

1. Check your entitlement amount: Request an updated COE from the VA or look in your eBenefits account to see your current entitlement balance.

2. Consider selling existing home to restore entitlement: Selling your original VA home lets you reuse 100% of your entitlement on the second purchase.

3. Explore one-time restoration if keeping initial home: See if you qualify for a one-time restoration to reinstate your full entitlement if not selling.

4. Find a VA-approved lender: Work with a lender experienced in multiple VA loans. Ask about their qualifying overlays.

5. Submit loan application and documentation: Provide standard income, employment, asset documentation. VA will need entitlement verification.

6. Be prepared to justify dual VA loans: Expect to provide written details on why you need 2 loans and how you’ll pay both mortgages.

7. Await lender approval: It may take longer for an underwriter to review and sign off on 2 concurrent VA mortgages.

8. Close on second VA loan: At approval, move forward with closing on the new loan while keeping payments current on the first VA mortgage.

The process has extra hurdles compared to a standard VA refinance or purchase. But with perseverance and a strategic approach, qualifying for 2 VA home loans simultaneously is possible.

Alternatives If Second VA Loan Denied

If your application for a second VA mortgage is denied, you may have to consider alternative options such as:

• Selling your current home and restoring VA entitlement for the new purchase
• Looking into conventional loan programs requiring larger down payments
• Applying for a non-VA government loan like FHA or USDA if you qualify
• Seeking a portfolio loan from a lender willing to work outside of VA guidelines
• Downsizing purchase price or increasing down payment amount
• Improving credit score or debt-to-income ratios and reapplying

Though not always possible, a second VA loan can offer big benefits if approved. But if denied, be ready with alternative plans so you can still achieve the goal of homeownership.

FAQs about Getting 2 VA Mortgages

Here are answers to some frequently asked questions about obtaining two VA-backed home loans:

Can I rent out my current VA home and buy another primary residence?

Yes, renting out an existing VA property and using entitlement for a new primary residence is allowed with lender approval. However, rental income cannot be counted towards DTI requirements.

What happens if I default on one VA loan while having two?

Defaulting on either loan results in forfeiture of your remaining VA entitlement. Loss of entitlement makes obtaining any future VA loans difficult.

Do I need a down payment for my second VA loan?

No down payment is required if you have full entitlement. With partial entitlement, you may need to make a down payment to keep total loan amounts within entitlement limits.

Can I get a VA cash-out refinance for a second home?

Yes, VA cash-out refinancing is possible on a second VA loan assuming you meet credit, income, and other program requirements.

What if I already used my one-time restoration of entitlement?

If you’ve already restored entitlement once, you would need to first sell your initial VA home before using entitlement for a second loan.

The Bottom Line

Qualified veterans and service members can utilize their VA home loan eligibility multiple times under certain circumstances. While restrictions apply, it is possible to get approved for 2 VA-backed mortgages concurrently if you meet key requirements. Understanding how VA entitlement works and following the right steps can help make getting a second VA loan a smooth process.