Can You Have Two VA Home Loans? Understanding Concurrent and Sequential Usage

As a veteran, one of the benefits you’ve earned is the ability to get a VA home loan. This program allows eligible veterans active-duty servicemembers reservists, and surviving spouses to purchase a home with no money down and no private mortgage insurance. It can be an incredible help to those wanting to buy their first home.

But what if you already have a VA loan and want to buy another property? Can you get approved for two VA home loans at the same time? Or do you have to wait until you sell the first home?

The short answer is yes, it is possible to have two VA loans concurrently under certain circumstances. However, it can also get complicated quickly depending on your situation. In this article, we’ll break down everything you need to know about having two VA mortgages simultaneously or sequentially.

How VA Entitlement Works

First, it helps to understand what VA entitlement is and how it enables no-downpayment loans.

When you get a VA loan, the Department of Veterans Affairs guarantees a portion of the mortgage in case of default. This guarantee is called entitlement and is what gives lenders confidence to offer 100% financing.

The standard entitlement amount is $36,000. So on a $200,000 loan, the VA would guarantee 25% or $50,000.

However, for loans above $144,000, VA entitlement goes up to 25% of the loan amount. So if you wanted to buy a $300,000 home, the VA would guarantee up to $75,000 rather than being capped at $36,000.

This higher limit is referred to as “bonus” or “secondary” entitlement. And it’s what allows veterans in expensive housing markets to buy with no money down since entitlement can scale to 25% of a larger loan amount.

Can You Have Two VA Loans at the Same Time?

When you get a VA loan, it uses up some or all of your entitlement. So what happens if you want to buy again while still paying off the first mortgage?

The short answer is yes, it is possible to have two VA loans concurrently if you have sufficient remaining entitlement.

For example, let’s say you used $50,000 of your entitlement on a $200,000 loan. If you want to buy a $300,000 home, you could tap into your bonus entitlement for another no-downpayment loan since you have $75,000 left.

However, there are strict occupancy and underwriting requirements for this scenario:

• Previous Loan: The first VA loan must be for your primary residence. Investment or second home loans don’t qualify.

• New Loan: The second VA loan must also be for your new primary residence.

• Underwriting: You’ll need strong credit, income, and cash reserves to cover both mortgage payments.

• Occupancy Timing: You’ll typically need to move into the new home within 60 days and occupy the first home for at least 60 days afterwards.

As you can imagine, meeting all the concurrent VA loan guidelines can be challenging. Working with an experienced VA lender is highly recommended before attempting this.

Common Scenarios for Two VA Loans

While rare, there are a few situations where holding two VA mortgages simultaneously can make sense:

• Active duty PCS: Active duty servicemembers who have orders to move to a new duty station can buy their next home before selling the previous one.

• Government restrictions: Federal employees or contractors whose job requires them to move quickly may need to buy again before listing their current home.

• Market timing: Some homeowners may choose to buy their next home first if they need or want to wait for the right time to list and sell the prior residence.

• Investment conversion: A homeowner may convert their current primary VA loan into a rental investment property by buying another home with their remaining entitlement.

As you can see, most examples relate to exception scenarios like job relocations. For most veterans, you’ll need to sell the first home before buying another with VA financing.

Can I Have Two VA Loans Sequentially?

A much more common scenario is wanting to buy again after you sell the first home or pay off the initial VA loan. The good news is you can absolutely use your VA benefits again after paying off the original mortgage.

Your entitlement gets restored once the first loan has been repaid in full. This allows you to reuse the VA home loan benefit to:

• Purchase another primary residence
• Refinance your current home into a lower rate
• Take out a cash-out refinance on your existing property

The process is the same as getting your first VA loan. You’ll apply for a new Certificate of Eligibility, get pre-approved by a lender, and go through the mortgage process.

The main limitation is that your entitlement needs to be available. If you had a VA foreclosure or short sale, your entitlement could be tied up until you repay the loan guarantee claim paid out.

But in most cases you can use your VA benefits over and over again throughout your lifetime. There is no limit to the number of times you can reuse VA loan eligibility sequentially to buy or refinance as long as you have sufficient entitlement.

What Are the VA Loan Limits?

We’ve mentioned that bonus entitlement allows you to borrow above the standard $144,000 loan limit. But what are the actual VA mortgage limits?

VA loan limits vary by county across the country based on local home prices. For 2023, they range from a floor of $647,200 in expensive markets to just $424,100 in lower cost areas.

You can look up the exact VA loan limit for any county using the FHFA Conforming Loan Limits tool.

Just pay attention to the 1-unit limit which applies to single family homes. The higher amounts for 2, 3, and 4-units are for multifamily properties.

As long as you have sufficient entitlement left, you can borrow up to the VA county loan limit without a downpayment. Above that limit, you’ll need to make a 25% downpayment on the portion exceeding the limit.

So in practice, VA loan limits don’t restrict how much you can borrow as long as you have the income, credit, and downpayment funds required by the lender.

pros of Using your VA Loans Benefits Multiple Times

Being able to use VA home loans repeatedly over your lifetime has many benefits:

• No downpayment requirement – Each new VA loan lets you buy or refinance with 100% financing based on your available entitlement.

• Lower rates – Interest rates on VA loans are consistently lower compared to conventional or FHA mortgages. This saves you money each month and over the life of the loan.

• No monthly MI – You’ll never have to pay monthly mortgage insurance on a VA loan even with less than 20% down. This can save you thousands vs FHA.

• No prepayment penalty – VA loans do not charge any early repayment penalty. So you have flexibility if you sell or pay off the mortgage faster than expected.

• Streamline refinance – VA IRRRL refinances let you quickly drop your interest rate without an appraisal or full documentation. It’s the easiest way to refinance later.

• Tax break eligibility – Each new VA loan restart the tax break countdown. So you can deduct mortgage interest on your taxes for each new primary home purchase.

Being able to reuse your hard-earned VA benefits multiple times gives veterans incredible home financing flexibility throughout life. Make sure to tap into this advantage when buying or refinancing real estate.

Cons of Having Two VA Loans Concurrently

While using your VA entitlement sequentially is fairly straightforward, holding two loans concurrently comes with some downsides to consider:

• Tighter DTI requirements – Your debt-to-income ratios will be calculated on both mortgage payments, making qualification more difficult.

• Higher credit and income needed – Most lenders will require solid FICO credit scores and enough income to cover both monthly payments.

• No tax break on old home – You lose the mortgage interest tax deduction once the original home is no longer your primary residence.

• Difficulty meeting occupancy rules – You’ll need to time selling, buying, and moving perfectly to satisfy the VA occupancy guidelines.

• Higher costs – Holding two homes is more expensive with utility costs, property taxes, insurance, HOA fees, and maintenance on both properties.

• Challenging logistics – It can be difficult to coordinate showings, repairs, and resales when concurrently managing two homes in different locations.

Unless you have a clear need and the financial means, most veterans are better off sticking to sequential use of their VA loan benefit.

alternatives to Having Two VA Loans

If you don’t want to deal with the strict guidelines and extra costs of concurrent VA financing, here are a few options to consider instead:

• Bridge loan – A bridge loan lets you buy the new home first by providing short-term financing. You pay this off when selling the original residence.