The Department of Veterans Affairs is a government agency that helps veterans and military personnel obtain financing to buy homes by offering the Veterans Affairs VA loans. Getting this loan offers many benefits to veterans and service people.
Some benefits include low or no down payment, less strict credit score requirements, fewer fees and more. Surprisingly enough, some veterans have more than one VA loans at a time. Read on if you want to learn more about how that works.
Is it Possible to Have More than One VA Loan?
It’s very possible to have more than one VA loan at a time. A second home can be bought by using what’s referred to as a Second-Tier Entitlement. The VA gives veterans a certain dollar amount known as an entitlement. So long as the maximum entitlement is not all used up, the individual can buy a second home with another VA loan.
The borrower will still have to qualify for the second loan with the lender. If the first mortgage was used for rental property, the borrower may need to show proof of rental income for the first property as well.
What Determines Loan Amount?
The loan amount for a VA loan is determined by the entitlement, which is $36,000. The original “old” maximum loan amount was typically $144,000. Four times the amount of the entitlement. This does not mean that $144,000 is the maximum amount a veteran could borrow.
The Veterans Affairs will guarantee 25% of the amount over $144,000. Because many areas are more expensive in which to live and buy homes, the maximum amounts are higher in those areas. For instance, in the DC Metro Area, the maximum loan limits are up to $768,750. This means the 25% guarantee entitlement would be $192,187.50. Again, having more than one VA loan is possible only if the veteran hasn’t used up his or her entire entitlement.
How Many VA Loans Can You Have at One Time?
If you were to ask a person who’s currently paying one mortgage off how they felt about getting another mortgage, they might say they’d run in the opposite direction. However, there are some circumstances where a homeowner is ready and willing to get a second loan or even a third loan. One situation is if the first or second mortgage is to be used as rental property. In this case, the mortgage payment is typically paid from the rental.
Another situation might be where the first mortgage is or will be paid off or the home is being sold. The veteran would be eligible for another VA loan because he or she is getting the entitlement back. Regarding having multiple VA loans at one time, the clearest answer is that it all depends on the amount of the entitlement and the maximum loan amount available.
It’s important to remember that while it may be Veterans Affairs that guarantees the loan, it’s still the lender that provides the financing, and a lender goes by the borrower’s finances. A lender is not going to be as concerned at the number of mortgages a borrower has as much as the borrower’s ability to repay them.
If you’re a veteran who’s ready to make a purchase or one who is interested in a second veteran’s loan, contact us and speak with one of our loan specialists. At First Choice Loan Services, Inc., we have a team of specialists ready to assist you in your loan process.