Making the Most of Your VA Benefits: How to Qualify for Two VA Loans at Once

As a veteran, you’ve earned exceptional mortgage benefits through your service to our country. The VA home loan program allows eligible borrowers to purchase a home with no down payment or to refinance an existing loan into a lower rate and payment. What many veterans don’t realize is that they can qualify for two VA-backed loans simultaneously under certain circumstances.

In this comprehensive guide, we’ll cover everything you need to know about getting approved for two VA mortgages at the same time. With the right planning and preparation, you can fully leverage your VA entitlement to buy, build, or improve two properties

Overview of VA Entitlement

First let’s review some key facts about VA home loan entitlement which refers to the amount the Department of Veterans Affairs guarantees on your loan. This guaranty enables you to get a mortgage with no down payment in most cases.

• VA entitlement is typically 25% of the loan amount. So on a $200,000 loan, your entitlement would be $50,000.

• The basic entitlement is $36,000. There is also “bonus” entitlement of $144,000, allowing eligible borrowers up to $181,000 total.

• When you use your VA loan benefit, your entitlement gets tied up in that mortgage.

• The unused portion can be applied to a second VA loan.

Why Pursue Two VA Loans?

There are a few scenarios where getting approved for two VA-backed loans simultaneously can make good financial sense:

Active duty PCS move – Relocating to a new duty station is a prime opportunity to keep your current home as a rental rather than selling it. This allows you to buy again with your remaining VA entitlement in the new area.

Build a vacation home – If you have sufficient income to support two mortgages, you may look to buy a second home or cabin using your available entitlement.

Investment opportunity – Some veterans leverage their VA benefit to purchase a multi-family property or a fixer-upper home they can renovate and rent out.

Limited housing inventory – In some markets with restricted inventory, keeping your current home while searching for another may be the only practical option.

Low rates – When interest rates are near all-time lows, qualifying for a second VA loan can be a strategic move.

Steps to Getting Approved

If you’ve decided pursuing two VA loans at once aligns with your real estate goals, here is a step-by-step overview of the process:

1. Check your VA entitlement

Your lender will need to verify how much entitlement you have left after your first VA loan. This determines the maximum loan amount you can qualify for with no down payment on the second loan.

2. Get pre-approved

Work with your lender to get pre-approved based on your income, credit score, and debts. This shows sellers you are ready to move forward.

3. Make an offer

Once you find the right home or second home, submit an offer and negotiate the purchase price.

4. Update COE

Ask your lender to order an updated Certificate of Eligibility from the VA reflecting your remaining entitlement.

5. Complete loan process

Finish up the loan application, appraisal, underwriting, and closing process. Lenders will require you to verify occupancy plans.

6. Occupy new home

The VA requires you to move into the new home as your primary residence for at least a year in most cases. After occupying the home, you can convert it into a rental.

How Entitlement Works for Two Loans

Now let’s walk through some examples to demonstrate how dual VA loans work with entitlement:

Example 1

• First VA loan amount: $200,000
• Entitlement used on first loan: $50,000
• Remaining entitlement: $181,000 – $50,000 = $131,000
• Maximum second loan with no down payment: $131,000 x 4 = $524,000

In this case, the borrower has enough entitlement left to qualify for over $500,000 on the second loan with no down payment required.

Example 2

• First VA loan amount: $300,000
• Entitlement used on first loan: $75,000
• Remaining entitlement: $181,000 – $75,000 = $106,000
• Maximum second loan with no down payment: $106,000 x 4 = $424,000

Here the borrower can qualify for up to $424,000 on a second home before needing to pay a down payment.

Example 3

• First VA loan amount: $650,000
• Entitlement used on first loan: $162,500
• Remaining entitlement: $181,000 – $162,500 = $18,500
• Maximum second loan with no down payment: $18,500 x 4 = $74,000

In this scenario where the first loan tapped into most of the entitlement, the borrower can only qualify for up to $74,000 on the second loan with zero down.

Income and Debt Considerations

When applying for two mortgages, lenders will closely analyze your income and debts to ensure you can handle both payments. Key factors include:

• DTI – Your total debt-to-income ratio must generally stay under 41% to 43%.

• Rental income – If renting out the first home, underwriters will require lease agreements. 75% of rents can count toward your income.

• Credit score – The higher your score, the better your chances of approval on two loans. Scores above 620 are ideal.

• Residual income – Lenders verify you have enough income left over each month after debts and living expenses. Residual income requirements must be met on both properties.

Also keep in mind that a higher down payment will strengthen your case for getting approved for two VA loans concurrently.

Occupancy and Ownership Seasoning Requirements

When using your VA benefit on two homes simultaneously, there are VA occupancy and ownership seasoning rules you must follow:

• You must personally occupy the new home as your primary residence for at least one year in most cases.

• Lenders require a signed statement verifying your occupancy intentions.

• There are no rules about when you can sell or move out of the second home once you’ve met the minimum occupancy period.

• On refinances, lenders impose seasoning requirements on how long you must own the property before refinancing. Typically at least six months.

Review guidelines closely with your lender, as violations could jeopardize your VA loan benefits.

Impact on Restored Entitlement

Veterans who had a previous VA loan foreclosure or short sale have the option to restore their full entitlement one time. But entitlement can only be restored on the first property financed after the foreclosure – not on two simultaneous loans.

Keep this restriction in mind if restoring entitlement after a claim so you can maximize the benefit. Also know that restored entitlement has special occupancy requirements.

Choosing the Right VA Lender

Not all mortgage companies are experienced with VA financing, so it’s critical to choose the right lender when pursuing two loans at the same time. Be sure to select an established lender that:

• Specializes in VA loans with a large lending footprint

• Has an efficient underwriting process

• Is familiar with VA requirements on dual loans

• Will take the time to explain the steps and guidelines

The lender you choose can make or break your experience and chances for success. Do your research to pick the best fit.

Alternative Options to Explore

Two VA loans simultaneously may not be the ideal solution for everyone. Here are a couple alternatives you could discuss with your loan officer:

Cash-out refinance – If substantial equity is built up in your current home, a cash-out VA refinance could potentially provide funds to purchase a second property with a conventional loan.

Down payment assistance – Local or state programs may offer grants and low-interest second mortgages that enable you to buy again even if VA entitlement was exhausted. These programs combined with a conventional loan with 5% or 10% down are worth exploring in lieu of two VA loans.

Carefully weigh all your options to make the right decision for your family’s financial situation and goals.

You Earned Your VA Benefits

Thanks to your military service, you have access to one of the best mortgage programs available. While qualifying for two VA-backed loans concurrently requires some hoops to jump through, it is achievable if you have the need and proper entitlement.