Why would someone want more than one Veterans Administration loan at the same time? Let’s look at one example: You may be living in Tampa, Florida, near MacDill Air Force Base in a home financed with a VA loan. All of a sudden, you receive orders to change bases to one of the various bases in Texas. However, you do not want to sell your home in Florida and you do not want to rent a home in Texas — you would prefer to purchase a home there instead.
Fortunately, it is possible for some individuals, though not all, to qualify for a second VA loan. Understanding what rules apply and how they apply is a good first step to determining whether a second VA loan may be right for you.
Understanding Entitlement
VA loan entitlement is the amount of money the US Department of Veterans Affairs will guarantee on a VA home loan. This determines how much someone who qualifies for VA benefits can borrow before having to pay out of pocket for a down payment. Entitlement allows you to secure a VA loan with little to no money down.
Eligible veterans, service members, and survivors with full entitlement no longer have limits on loans over $144,000. This means you won’t have to pay a down payment, and the VA guarantees to your lender that if you default on a loan that’s over $144,000, it will pay them up to 25% of the loan amount.
You have full entitlement if you meet at least one of the requirements listed below:
- You’ve never used your home loan benefitYou’ve never paid a previous VA loan in full and sold the property (in this case, you’d have your full entitlement restored)You’ve used your home loan benefit but had a foreclosure or compromise claim (also called a short sale) and repaid the loan in full
Qualifying for Multiple VA Loans
A Certificate of Eligibility (COE) issued upon verification by the VA shows a lender that a person qualifies based on their service history and duty status. You may still be able to get a COE if you were discharged under several qualifying circumstances. You will, of course, still need to meet your lender’s loan qualifications. You can use your remaining entitlement — either on its own or together with a down payment — to take out another VA home loan.
With remaining entitlement, your VA home loan limit is based on the county loan limit. If you default on your loan, the VA will pay your lender up to 25% of the county loan limit minus the amount of your entitlement that you’ve already used.
You can use your remaining entitlement — either on its own or together with a down payment — to take out another VA home loan. You may have remaining entitlement if one or more of the following is true:
- You have an active VA loan that you’re still paying backYou’ve paid a previous VA loan in full and still own the homeYou’ve refinanced your VA loan into a non-VA loan and still own the homeYou’ve had a compromise claim (or short sale) on a previous VA loan and didn’t repay us in fullYou’ve had a deed in lieu of foreclosure on a previous VA loan (this means you transferred your home’s title to the bank that holds your mortgage to avoid foreclosure)You’ve had a foreclosure on a previous VA loan and didn’t repay it in full
Considerations When Seeking a Second or Third VA Loan
Having two VA loans at one time is possible and really depends on your circumstances. There are, however, additional requirements to be met in order to qualify.
For example, the majority of borrowers requesting to secure a second VA loan rent out their first home and use that rental income to qualify for the second VA loan. Lenders will still look at the following items to determine your eligibility.
- Credit history Employment Assets and income Any additional income, in this case rental incomeCurrent mortgage paymentsRatio of debt to income
While renting out one home in order to use that rental income to qualify for a second loan can help you achieve a positive debt-to-income ratio, each lender has its own rules on how to deal with income from rental properties when there is a mortgage on those properties.
How Can The Home Loan Expert Help?
Hero Loan, The Home Loan Expert’s VA Loan Program. It is important to check with experienced lenders to navigate these requirements and receive the entitlements you deserve. Hero Loan is here to help and guide you through the ins and outs of the VA loan process and experience the full benefits of the VA loans and entitlements.
Chris
