VA Loans are by far the best home financing option for veterans and active-duty service members. With zero down payments and lower credit score requirements, it’s an affordable and accessible way to buy a primary residence home.
Millions of military personnel are purchasing their first homes or retiring their dream homes all across the United States. You can become eligible for these home loan benefits by meeting the service and financial requirements.
After you use a VA Loan, it’s understandable to want another one, especially if you have a large family. You could also be moving with a permanant change of station orders and not want the pressure of selling your current home first before you can apply for another VA Home Loan.
How many VA loans can you have at once? The simple answer to this question is as many as you’d like. When a lender looks at your county’s conforming loan limits and your entitlement, they can help you buy a home with a VA Loan.
You can even have 2 at once under certain circumstances. However, there are some things you need to understand about entitlements and lenders to successfully get another VA Home Loan.
How Many VA Loans Can You Have?
Like we mentioned, you can have as many VA Home Loans as you want. The one requirement is that the VA lender must approve your multiple home loans.
What you may find is that you’ll have to put down a down payment if you don’t have remaining entitlement. That means the government will not guarantee or back any more of your second VA Loan and you’ll have to cough up a portion on your own.
However, you can take advantage of all the entitlements the United States government provides to obtain another VA Loan. And they can go towards your VA Funding Fee rather than worry about it and other closing costs.
Understanding VA Loan Entitlement
VA Loan Entitlement is the amount that the Department of Veterans Affairs will guarantee in your loan. Simply put, the lender would expect the VA to pay back a portion if you defaulted on the loan. That amount is the entitlement or free funding due to your generous sacrifice and military service.
On your 1st VA Home Loan, the VA will give a full entitlement so you can buy the house without a down payment. Every veteran applies for this amount with lower mortgages.
But for homes greater than $144,000, you have a full entitlement for 25% of the total loan amount.
Your certificate of eligibility (COE) document explains that you’re eligible as military for a $36,000 entitlement. This is also known as your basic entitlement and applies for homes below $144,000.
The VA will increase that amount to full entitlement if you are looking for a more expensive property.
2nd Tier Entitlement
The VA uses your full or basic entitlement when purchasing a home with the 1st VA Home Loan. However, a new financial backing goes into place if you’ve already used up the current one.
Factoring in your county’s VA Loan Limit, you can calculate how much the VA will cover by taking 25% of it.
Calculating Your 2nd VA Loan
To calculate how much entitlement you’ll have on the 2nd VA Loan, an experienced lender will run numbers on a calculator.
They will figure out how much 2nd tier entitlement you have based on the county’s VA Loan Limit. Finally, they will subtract how much full or basic entitlement you’ve used. This will give you a number for how much money the VA will cover on your additional property.
2nd VA Loan Example
Let’s say that Jimmy Vercellino and his family are purchasing another home. They bought a gorgeous house with their 1st VA Home Loan, but want to rent it out to buy an even better one.
The loan amount for the first home was $400,000, which means a VA lender would guarantee $100,000.
When he goes to buy the 2nd home, he’s already used his entire full entitlement. He didn’t have to put any down payment on it because he utilized funds from the VA. The experienced lender would look at the VA Loan Limit in Phoenix, which is $647,200.
25% of his local county’s loan limit is $161,800. That’s how much 2nd tier entitlement Jimmy would have, but now he has to subtract the $100,000 he used on the 1st home.
The calculation would look like this:
($647,200 x .25) - ($400,000 x .25) = $61,800
In the end, an experienced lender would accept $61,800 as a backing for his second home. Jimmy might be able to get away with not paying a down payment if his family wants to downsize.
But they’d probably increase with a down payment to afford something larger.
One-Time Entitlement Restoration
The great news about VA Loan Entitlements is that the VA will restore your full or basic entitlement in some cases.
You may have spent the VA Loan on a property you loathe and don’t have enough 2nd tier entitlement for a better one. However, you are able to restore your full entitlement and start over with a dream home your family will never regret.
Paying off your VA Loan and refinancing the military financing option to a conventional loan are scenarios where you can get a fresh start. We recommend speaking to an experienced lender that understands your unique home buying situation about entitlement restoration.
The United States honors your family’s past or current sacrifice to our good country. They reward you with an affordable VA Home Loan and even allow you to get multiple.
We believe active-duty families and veterans alike can receive VA Loan benefits from a 2nd mortgage, especially if you want to rent out one property for residual income.
Jimmy Vercellino, producing branch manager at VA Loans for Vets, is a veteran himself. His mission is to provide and assist you and your partner with your VA Home Loan financing needs.
With an experienced customer service team and model, they guide you through the VA Loan Journey every step of the way. We can also take care of you if you’re purchasing a home in active-duty and are busy with PCS orders. Surviving spouses of past service members can also qualify just like other eligible veterans.
To receive exceptional service for your 1st or 2nd VA Loan, call Jimmy’s cell at (602).908.5849. His veteran-run team would be glad to serve you with personalized attention and get you started on the VA Loan program.