Can You Have 2 VA Loans at Once? A Guide to Using Your VA Home Loan Benefits Twice

As a veteran you’ve earned fantastic benefits through your service including the ability to get a VA home loan. This program allows you to buy a home with no money down and no monthly mortgage insurance. It’s an incredible deal!

But what if you already have a VA loan and now want to buy another home? Can you get 2 VA loans at the same time?

The short answer is yes, it is possible to have 2 VA loans simultaneously under certain circumstances. While not common, there are legitimate reasons a veteran may need 2 VA mortgages concurrently.

In this comprehensive guide we’ll cover everything you need to know about getting 2 VA loans at once. We’ll discuss

• How VA entitlement works and when you may need a second loan
• Requirements and restrictions around having 2 VA loans
• Tips for managing 2 mortgage payments
• What happens if you default with 2 VA loans

Let’s dive in!

How Does VA Entitlement Work?

First, it’s important to understand the concept of VA entitlement. This refers to the amount of your loan that the Department of Veterans Affairs guarantees.

For most VA loans, entitlement is 25% of the total loan amount. So if you get a $200K VA mortgage, the VA backs $50K of it. This allows you to get a VA loan with no money down, as the VA protection compensates for your lack of a down payment.

Now here’s where it gets tricky. The VA actually provides you with two layers of entitlement:

• Primary entitlement – This is usually around $36K
• Secondary “bonus” entitlement – This totals around $145K

Add those together and you have over $180K in total VA entitlement.

When you use your VA home loan benefit, your entitlement gets “wrapped up” in that mortgage. The amount used is generally 25% of the loan total.

For example, let’s say Joe Veteran gets a $200K VA loan. He uses $50K of his entitlement, leaving him with $130K leftover.

This is where secondary entitlement comes in. Joe can now tap into that extra $130K if he needs to buy another home with a VA loan.

So in short, secondary entitlement allows you to have 2 VA loans at the same time. Let’s look at some scenarios where this applies.

When Can You Have 2 VA Loans?

There are a few situations where a veteran can hold 2 VA mortgages concurrently:

1. Active Duty Military with PCS Orders

This is the most common situation for having 2 VA loans.

When active duty troops get PCS (Permanent Change of Station) orders to a new duty station, they often have to move quickly. Some don’t have enough time to sell their current home before moving.

Rather than sell right away, they choose to rent out their current home. This allows them to buy a new primary residence at their new duty station with their remaining VA entitlement.

This results in having 2 VA mortgages at the same time – one on the rental property and one on their new home.

2. Building a New Primary Residence

Some veterans use their VA loan to buy land and build a home. They’ll live in their current residence during the construction.

In the meantime, they’ll use their leftover entitlement to take out a second VA loan to finance the new construction. Upon completion, they move into the new property and rent or sell the old one.

Again, this leads to briefly having 2 active VA loans before selling the other property.

3. Relocating Before Selling

Similarly, a veteran may be relocating to a new area but don’t have the luxury of time to sell their current home before moving.

Rather than sell right away at a potentially lower price, they rent out the old home. They then tap their remaining entitlement to buy their new primary residence in the new location.

This results in overlapping VA loans until the old home sells.

4. Retaining Rental Income

Some veterans plan to keep their current home as a long-term rental property for added income. They can use their leftover VA entitlement to buy a separate primary residence.

Now they have two VA-backed mortgages – one on their rental property and one on their new home. This requires careful planning around income, expenses, and VA guidelines.

As you can see, there are a few scenarios where having 2 active VA home loans makes sense. It provides flexibility for veterans in transition.

Next let’s review the guidelines around having 2 VA mortgages.

Requirements for 2 VA Loans

The VA has rules in place around holding 2 loans at once. Here are some key factors to note:

• Must be for two separate residences – You cannot have 2 VA mortgages on the same property. The loans must be for two distinct homes.

• Occupancy requirements – For any VA loan, you must personally occupy the home for at least a year before renting it out. This helps prevent fraud or misuse of VA financing.

• Loan amounts and entitlement – As we discussed earlier, you can only borrow up to your available entitlement. Review how much is left over from your current VA loan.

• Credit and income – Lenders will closely assess your finances to ensure you can handle 2 mortgage payments. Expect much stricter standards.

• VA guidelines – Your lender will advise you on all VA regulations, including occupancy rules, total debt limits, and eligibility requirements.

The key takeaway here is that you must follow VA procedures and prove that you can manage 2 home loans responsibly. It’s critical to work with an experienced VA lender who can guide you through the process.

Managing 2 Mortgage Payments

Perhaps the biggest challenge with 2 loans is affording both mortgage payments each month. Here are some tips on handling dual housing payments:

• Lower your costs – Consider a 15-year VA mortgage on the new home for a lower payment. Or buy a less expensive property.

• Increase your income – Take on a side job or have your spouse work to generate more earnings. Rental income from tenants can also help.

• Build up savings – Before getting the second loan, save up a 6-12 month emergency fund in case of temporary income loss.

• Make a budget – Track your income and expenses closely each month to cover both housing payments. Cut non-essential costs.

• Pay extra – Make bi-weekly or additional monthly payments towards the higher interest loan to pay it down faster.

• Refinance – Once you have sufficient equity, consider refinancing one or both loans to lower the interest rates and payments.

• Communicate with lenders – If struggling, call both lenders immediately to discuss hardship options before missing payments.

With prudent planning and budgeting, it is possible to successfully manage payments on 2 VA home loans. But it requires diligence.

What if You Default on 2 VA Loans?

As a worst case scenario, what occurs if you default on one or both VA mortgages? This is where it gets complicated.

First, if you default on just one loan, the property associated with that loan will go into foreclosure. The VA may cover the outstanding balance that your entitlement secured.

The second VA loan should not be directly impacted. You can continue making payments on it. However, the default will crush your credit score, making the second loan more expensive.

If you default on both VA loans, you face dual foreclosures and overstretched finances. The VA will pay out whatever entitlement remains across the two mortgages. But you are responsible for the rest.

In addition, you will be barred from getting another VA loan for at least two years. And your credit score will make financing difficult even after the ban expires.

The key takeaway is to avoid default at all costs. Work closely with your loan servicers to utilize hardship assistance programs if necessary. While rare, defaulting with two VA loans creates a financial nightmare.

When Does Having 2 VA Loans Make Sense?

Given the risks and challenges, when does it actually make sense to have two VA mortgages? Here are some good cases for dual loans:

• Active duty with PCS orders – Allows you flexibility when moving to a new duty station.

• Building a new home – Lets you bridge the gap during construction.

• Relocating before selling – Provides time to sell your home without rushing.

• Holding a long-term rental – Can generate added income from tenants.

And some instances where dual VA loans may not be advisable:

• Job loss or income reduction – Makes covering two payments exceedingly difficult.

• Minimal leftover entitlement – Restricts the amount you can borrow on the second loan.

• Poor credit or high debt – Hurts loan eligibility and interest rates.

• Renovation delays – Adds costs if the construction drags on.

• Vacancy periods – No tenants means no rental income.

As always, discuss your specific situation with a VA lender first. They can offer guidance based on your finances, credit, and goals.