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 a major milestone in life. For many, it represents settling down, stability, and a piece of the American dream. If you’re a veteran or current service member, a VA home loan can help make buying your first home more affordable. But what if you want to buy a second home—can you use a VA loan again?
The short answer is yes, you can use a VA loan for a second home purchase under certain conditions I’ll explain how it works in this article. As a VA loan expert, I want to provide clear, detailed information to help you understand your options
VA Loan Benefits for First-Time Homebuyers
First let’s recap the key benefits of a VA home loan that make it a great financing option especially for first-time buyers
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No Down Payment Required: Unlike conventional loans, VA loans don’t require any down payment. This removes a major barrier to homeownership.
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No Mortgage Insurance: VA loans don’t charge monthly mortgage insurance premiums like other low or no down payment loan programs. This saves you money each month.
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Lower Interest Rates: VA loans often offer lower interest rates versus conventional loans, resulting in a lower monthly payment.
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More Relaxed Guidelines: VA loans are available to borrowers with lower credit scores and higher debt-to-income ratios versus conventional loans.
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Funding Fee Can Be Financed: The VA funding fee can be rolled into the loan amount rather than paid upfront.
Using a VA loan for your first home purchase makes buying more affordable. But what if you later want to buy a second home—can you tap into these VA benefits again?
How VA Entitlement Works for Multiple Loans
To understand repeat VA loan use, you need to know how VA entitlement works.
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All veterans have a basic entitlement of $36,000.
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You also get a bonus entitlement of 25% of the loan amount over $144,000.
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Your total entitlement is applied to guarantee the loan, up to 25% of the total loan amount.
For example, if you get a $200,000 VA loan, your entitlement calculation is:
- Basic: $36,000
- Bonus (25% of $56,000): $14,000
- Total Entitlement: $50,000
Since your total entitlement of $50,000 covers 25% of the $200,000 loan, you can get a no down payment VA loan.
However, entitlement is used up with each VA loan. To get another VA loan, you must have enough entitlement left to satisfy the 25% guarantee requirement.
Using Your VA Entitlement for a Second Home
When applying for a second VA loan, there are two main scenarios:
You Have Full Entitlement Available
If your first VA loan is paid off, your full entitlement is restored. This allows you to get a second VA loan with no down payment to buy another home.
You must request a restoration of your full entitlement from the VA by filing Form 26-1880 after your first loan is paid off.
You Have Partial Entitlement
If you still have an existing VA loan balance, you likely only have partial entitlement left over. In this case:
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Your remaining entitlement must cover at least 25% of the new loan amount.
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If not, you’ll need to make a down payment for the difference.
Let’s look at an example:
- Your first VA loan was $200,000, using $50,000 of entitlement.
- You have $36,000 entitlement left.
- You want a new VA loan for $300,000.
25% of your new loan is $75,000. But you only have $36,000 entitlement available. So you’d need to pay at least $39,000 as a down payment on the second home.
In this situation, a VA lender can explain your options to buy a second home using your available entitlement.
Occupancy and Waiting Period Requirements
To qualify for a VA purchase loan, there are two other key requirements:
Occupancy: You must intend to occupy the home as your primary residence. VA loans can’t be used strictly for investment properties.
Waiting Period: There is a minimum 90-day waiting period between the first VA loan closing date and the second loan application date.
However, there are some exceptions:
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Active duty service members can skip the waiting period with proper documentation.
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You may be able to rent out the first home after occupying it for at least 12 months.
Talk to your VA lender regarding exceptions and documentation needed.
Steps to Getting a Second VA Home Loan
If you want to buy a second home with your remaining VA entitlement, follow these key steps:
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Check your eligibility: Confirm you have sufficient entitlement and meet VA guidelines.
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Get pre-qualified: A VA lender will pre-qualify you based on your finances and entitlement.
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Find a home: Search for a home within your qualified price range that you intend to occupy.
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Make an offer: Submit an offer and negotiate the purchase price.
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Apply for financing: Formally apply for the VA loan once your offer is accepted.
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Close on time: Work quickly to satisfy loan conditions so you can close on time.
Your VA lender will guide you through every step of the process.
Alternatives if You Don’t Have Enough Entitlement
If you don’t have enough leftover VA entitlement for a second home purchase, you may have to explore other options, like:
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Making a larger down payment to reduce the loan amount
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Looking into conventional, FHA, or USDA loans
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Trying to restore your full VA entitlement
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Waiting to buy until you build up more savings
Discuss your alternatives with a mortgage professional to find the right solution.
The Bottom Line
While you can use a VA loan more than once, entitlement limits can make it harder to buy a second home with no money down if you have an existing VA mortgage. But with proper planning and advice from a VA specialist, you can optimize your benefits when buying again.
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.
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.
VA Loan Secrets: What Veterans MUST Know about Using Multiple VA Loans (updated 2023)
FAQ
Can I buy a second home on my VA loan?
Can I use a VA home loan if I already have one?
How many times can you use VA to buy a house?
What is the VA funding fee for a second home?
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.
Is it possible to have two VA loans at once?
Yes, it is possible to have two VA loans at once for two separate primary residences.The VA loan is a life-long benefit, and there’s no limit on how many VA loans you can have in a lifetime.Veterans can
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.
How much does it cost to buy a second VA home?
As with your first VA loan, you will need to pay a funding fee for the second home you purchase. Funding fees for second VA home loans are typically 3.3% —however, you may be able to lower the fee by making a down payment of at least 5%. Ads by Money. We may be compensated if you click this ad.