You’ve already used a VA loan to purchase a home. Now, you may be wondering if you are eligible for a second VA loan. The answer is yes, but you should know how your entitlement benefit works, what your financing cost will be, and a variety of other concerns before applying.
What is the maximum number of VA loans you can have? VA loans are available to you if you have residual entitlement (more on that below). Some of the most common situations that necessitate an additional VA loan include:
To acquire a second house with a VA loan, you must first sell the first one, re-establish your entitlement, and then apply for a new VA loan.
If you sell each house and move, you can have as many VA loans as you desire for the rest of your life.
You move from one VA debt to another by refinancing your current loan.
At the same time, you may be the beneficiary of more than one VA loan for distinct properties.
Using a VA loan several times can be done in a variety of ways.
Your VA eligibility can be restored if you sell your existing home.
To take advantage of another VA loan, you don’t always have to sell your home or relocate.
With a VA streamline refinance, you can lower your interest rate and monthly payment by refinancing into a new VA loan.
VA cash-out refinance loans need extra documentation but allow you to access the equity in your property.
This is the third option,
It involves taking out two VA loans for two separate properties at once.
There are times when an active-duty member obtains a Permanent Change of Station (PCS) order, and the VA lender will need to authorize numerous loans.
Basically, you’ll have to demonstrate that you have the financial resources to repay both loans simultaneously.
The benefits of a VA mortgage
To qualify for a VA loan, a borrower must meet the VA’s loan eligibility requirements.
This helps you figure out how much money you can borrow before you must put down a deposit. VA loans with lower interest rates, no down payment, and more lenient eligibility requirements are offered by lenders because of the protection afforded to veterans.
In 2020, the Department of Veterans Affairs (VA) abolished loan limits for veterans with full entitlement.
When it comes to partial entitlement, things get a little more complicated. Either 36,000 dollars or 25 percent of the loan amount up to the conforming loan limit commonly serves as the starting point for entitlement calculations.
Currently, $647,200 is the cap in most sections of the country, although in some markets, up to $970,800, the limit is in effect. A bonus of 25% of the $647,200 maximum is yours as a result.
An example., you have a $200,000 loan, which means that 25% of your entitlement is now being spent. You’ve decided to take out two VA loans now. You’ve already tapped into $50,000 of your quota for the year.
A bonus entitlement of $161,800 (25 percent of the conforming limit) now exists, but you’ll need to deduct $50,000 before claiming the bonus. In this case, you have $111,800 in entitlement for the second loan.
There is no limit to how much you can get, however. You may acquire a $447,200 loan from a VA-approved lender because the VA pledges to pay the lender a quarter of that amount if you default.
If you have full entitlement, there is no limit to the VA loan amount, and if you meet the lender’s requirements, you won’t have to pay a down payment if you qualify.
Call the VA at 877-827-702 to speak with a home loan agent if you have any outstanding entitlement inquiries.
Customers can contact the company’s customer care department between the hours of 8am and 6pm Eastern Standard Time, Monday through Friday.
Getting a second VA loan is a simple process.
Getting a second VA loan is likely to feel very much like getting your first VA loan. The following is a step-by-step breakdown of the process:
Request a copy of your eligibility certificate.
As a result, lenders will know if you are eligible for a VA loan, and it will also assist you determine how much of your entitlement benefit is available for usage.
You can acquire it via your regional service center or through your benefits portal.
Your discharge papers may also be necessary.
Consider your options before deciding.
Buying a new house may necessitate selling your current residence to maximize your entitlements.
Decide what’s more essential to you: more money or less work if you refinance.
A VA IRRRL or a cash-out refinance may be better options if you’re just thinking about refinancing your mortgage.
Make sure your finances are in order before you begin.
Even though the Veterans Administration does not need a minimum credit score, VA lenders often do. It’s important to check your credit record and pay off any outstanding debts before applying for a second loan to show that you can afford your new monthly mortgage payments.
Buying a home vs. renting based on eligibility
Why not consider renting your current residence while you apply for a VA loan to purchase a new one?
If, for example, you’re stationed elsewhere but don’t want to sell your current property, this could happen.”
David Reischer, an attorney in New York City, argues that in this instance, “you decide to rent out your existing house and purchase another one.” Only one restriction applies: You can’t rent out your primary residence and then buy a comparable-sized home nearby.
To accommodate a growing family, the second home would either have to be a larger residence or be located in a different neighborhood.
For the second VA loan, “you would not be able to use any of that rental income to lessen your debt-to-income ratio,”
That rental income may, however, help you qualify for a second VA loan by reducing your mortgage payment.” A second VA loan’s effect on the cost of borrowing
It’s impossible to avoid the funding fee on a VA loan; you may end up paying more for it on your second loan. The funding charge is 3.6 percent if your down payment is less than 5% of the purchase price on your second VA loan (and any subsequent ones).
However, if you’re able to put down more than 5% or 10% of the purchase price, the funding charge drops to 1.65% and 1.40%, respectively.
It is possible to reclaim your VA mortgage benefits
Remember that you have an entitlement limit, but if you sell your property and pay off the VA loan in full, you can get your entitlement back. Loan repayment or refinancing doesn’t remove the entitlement amount from your residence; it just removes it from the property’s equity.
Fortunately, there is an exception to the VA’s must-sell rule: You can request a one-time restoration of your benefit.
Assume that the buyer of your property for sale is a veteran who assumes your existing VA mortgage. In this case, you can ask this person to substitute their entitlement for the same amount of entitlement that you originally used. In one case study, says that if they agree, possible the original entitlement will be restored.
Your entitlement to buy the house will be held hostage until the new owner fully repays the loan if they don’t agree.
Forever losing your eligibility for a VA loan.
It’s possible that you’ll be permanently disqualified from receiving a VA loan. It’s possible that the lender will be forced to refund the VA if you fail to make payments on your VA loan and your house is foreclosed and sold for less than you owe.
When the VA makes a loan payment to the lender, the amount is removed from your entitlement, and you can’t get it back.
This is also true in a short sale, where your home is sold for less than what you owe.
The one-time restoration of entitlement benefit is not available in the case of short sales or foreclosures; thus you cannot use it.
I have two VA loan specialist I can refer you to help clarify additional questions. Please call me (Dan Swing) at 904-671-9225