Using a VA Home Loan for a Second Home: What You Need to Know

Purchasing a home is an exciting milestone in life. For many veterans and active military personnel, a VA home loan can help make homeownership more affordable. But what if you already own a home and are looking to purchase a second property – like a vacation home or investment property? Can you use a VA loan for that?

The short answer is yes, you can use a VA home loan for a second home under certain conditions. While VA loans are intended for primary residences, there are some scenarios where you can tap into your VA home loan benefit for a second property.

In this article, we’ll walk through when and how you can use a VA home loan for a second home purchase. We’ll cover key factors like:

• VA occupancy rules
• How your VA entitlement works with multiple loans
• Converting a primary home to a second home or rental
• Buying a second home before selling your first
• Using VA loans for vacation properties

Understanding these guidelines will help you determine if a VA home loan is the right financing option if you’re in the market for a second home

VA Occupancy Requirements

The most important factor to understand with VA loans and second homes is the occupancy requirement. The VA requires that any home purchased with a VA-backed loan must become your primary residence within 60 days of closing.

This means you can’t go out and buy a pure “second home” like a vacation property on the lake with plans to visit it a couple times a year, The home needs to be where you live most of the time

However, the VA does make exceptions if your life circumstances prevent you from moving in within 60 days. Common exceptions include:

• Active duty service members who are deployed can delay occupancy until their return
• Pending retirement allows delayed occupancy up to 1 year if you plan to make the home your primary residence upon retiring
• Major repairs or renovations to make the home livable allow delayed occupancy during the rehab period

So if you plan carefully and time home purchases around life events, you can effectively end up with two VA-loan financed homes.

For example, let’s say you buy a new primary residence with a VA loan. Then upon retirement a year later, you convert your original house to a vacation home or rental property. The key is that each home must be initially purchased as a primary residence

How VA Entitlement Works with Multiple Loans

Any time you have two concurrent VA loans, your entitlement will come into play. Your Certificate of Eligibility (COE) lists your entitlement – the maximum amount the VA will insure across all your loans.

The standard VA entitlement is around $600,000 for most veterans.

Here are a few scenarios to understand entitlements with multiple VA loans:

• If your first VA loan is $300,000, you would have $300,000 of entitlement left for a second VA loan.
• Entitlement is restored once loans are paid off. So you could use your full $600k entitlement again for another VA loan after paying off the first.
• If you exceed your total entitlement across multiple loans, you may have to make a downpayment on the excess amount.

Carefully tracking your entitlement usage is crucial when financing two homes with VA loans. Your lender can help advise you on how much entitlement you have remaining.

Converting a Primary Residence to a Second Home

One of the most common ways veterans end up with two VA loan-financed properties is through a change of station or retirement.

For example:

• A service member receives orders to a new base and purchases a new primary residence with a VA loan near the new base.
• Rather than selling their initial home, they choose to rent it out or use it as a vacation property.

This is completely allowed, as long as the new property purchased with a VA loan is occupied as the primary residence. The same goes for a working-age veteran who gets a new job opportunity in a different area.

Converting a primary residence purchased with a VA loan into a rental property or second home upon moving is a great way to build real estate investments over time.

Buying a Second Home Before Selling the First

Another scenario where you might end up with two mortgages is when you buy a new primary residence before selling your existing home.

This situation is trickier with VA loans, but possible if planned carefully. The key considerations are:

• You must be able to qualify for both mortgage payments simultaneously based on your income and debts. Lenders will want to see you can handle both payments.
• You’ll need to have enough remaining VA entitlement to cover both loan amounts.
• You must legitimately plan to occupy the new purchase as your primary residence within 60 days and put your original home up for sale.

As long as you meet VA occupancy rules and entitlement limits, this can help you move into a new home before finalizing the sale of your old property. Just know that carrying two mortgages is a major financial commitment.

Can You Use a VA Loan for a Vacation Home?

Given the primary occupancy requirements, the VA does not allow using a loan solely for a vacation home or weekend getaway property. However, there are a couple scenarios where you could effectively end up with a VA-financed second home for vacations:

• As mentioned earlier, converting an existing primary residence into a second home upon relocating or retiring. This second home could then be used as a vacation property.
• Active duty personnel who are within 12 months of retirement can purchase their future primary retirement residence in advance and delay occupancy for up to a year. This future retirement home could be in a vacation destination as long as you plan to move in full-time upon retiring.

While direct purchase of a vacation-only home is not permitted, strategic timing and planning allows converting a primary home into a vacation property after purchasing a new primary residence with a VA loan.

Tips for Using a VA Loan for a Second Home

If you’re considering using a VA home loan for a second property, keep these tips in mind:

• Review your VA entitlement before starting – know exactly how much you have available across multiple loans.
• Time home purchases around life events like relocations or retirement to comply with occupancy rules.
• Discuss plans with your lender early – they can advise if your scenario fits within VA guidelines.
• Be conservative on affordability – carrying two mortgages is a big financial commitment. Make sure your income and savings are sufficient.
• Consider bridge financing options if needed – VA loans can take 45-60 days to close, so you may need a short-term loan while buying and selling.
• Have a solid plan in place for converting your prior primary residence to a rental or second home.

While not as straightforward as financing a single primary home, VA loans can be a great way for military buyers to finance a second home when planned properly. Just be sure to understand the requirements and consults with your lender to map out a strategy that works for your situation.

Final Thoughts

Purchasing a home – whether it’s your first, second, or tenth – is an exciting endeavor. For veterans and service members, VA home loans help make homeownership more accessible with key advantages like no down payment and flexible qualifying.

While VA loans are primarily designed for first homes, they can also be used for second homes in certain situations if you follow VA policies around occupancy, entitlement, and converting primary residences.

Any time you’re financing two properties simultaneously, make sure you run the numbers carefully and have a solid exit plan in place if you need to sell the first home. Using VA home loans strategically can help you purchase second homes over your lifetime as your needs change and real estate portfolios grow.

Just be sure to thoroughly understand the guidelines around using VA financing for a second home purchase. If it aligns with your homeownership goals, a VA loan can be a great financial tool to help buy a new primary or secondary residence.