04 Apr How Many Times Can You Get A VA Loan?
If you’ve ever utilized a VA loan to buy a house, you are already aware of its many advantages, including its low-interest rates, lack of mortgage insurance, and—perhaps most significantly—the absence of a down payment. Even property tax exemptions are frequently provided to qualified veterans by local and state governments.
If you have already utilized a VA loan for a house purchase and plan to buy a new home soon, you might wonder if you can apply for another VA loan. Is there a cap on how often a VA loan may be used?
How Many Times Can You Apply For A VA Loan?
Veterans, current military personnel, and surviving spouses who meet the requirements may utilize their VA loan benefit as much as they’d like during their lives. There is absolutely no limit on the number of these mortgages you may take out in your life as long as you are still qualified for a VA loan and can meet the requirements with a lender.
In some situations, having multiple VA loans open at once is even feasible.
Veterans of the military services and, in some situations, their surviving spouses are eligible for VA home loans. There are various VA loans, and they have numerous advantages, the most important of which is the absence of a down payment requirement for house purchases.
For borrowers, especially first-time home purchasers, the down payment is sometimes the largest barrier to homeownership. For those who qualify, VA loans may significantly increase access to homeownership.
The Department of Veterans Affairs (VA) backs VA loans. The VA guarantees mortgages provided by lenders rather than making these loans themselves. Because there is less risk for the lender, VA loans sometimes have more favorable terms than other loan types, like conventional loans or FHA loans.
The VA had varied qualifying requirements for VA loans depending on when and how long you served.
One drawback of receiving a mortgage with no down payment is that you must pay the VA financing fee. This one-time charge aids in defraying the price of the VA loan program.
Veterans who have a handicap that the VA has recognized are free from paying the VA funding fee. If your spouse passes away due to an injury sustained while serving or on active duty, you are exempt from paying the financing fee. Those who get a Purple Heart and then return to active service are the last exception.
First-time VA borrowers who put less than 5% down will be charged a fee equivalent to 2.15% of the loan balance. With the same down payment, subsequent borrowers pay a bit more: 3.3%. A more significant down payment will result in a cheaper finance charge. This charge may be paid in whole at loan closing or financed.
How Many Existing VA Loans Can You Have?
VA loans come with occupancy restrictions that must be met to ensure that they will only be used for primary residences.
But, it is conceivable to have two VA loans open at once, each for a different principal address. When a service member is given orders for a permanent change of station (PCS), which requires them to transfer to a new duty station, this might occasionally happen.
VA Loan Entitlement: An Important Factor
The VA loan entitlement is the portion of your loan that the VA will guarantee; in other words, it is the amount the VA will pay your lender if you cannot pay the loan.
Only loans up to a specified amount are eligible for VA loan guarantees. This sum is yours to keep.
You will have what is referred to as “full entitlement” if you had never had a VA loan before or used a VA loan to buy a property but had your entitlement fully restored (typically as a result of selling the home), paying off the mortgage).
The VA will provide up to $36,000 in loan guarantees for loans under $144,000. This is also known as your fundamental entitlement. It is challenging to obtain houses at this price in many parts of the nation, so the VA guarantees up to 25% of loans over $144,000. This sum may also be known as bonus entitlement or tier 2 entitlement.
Your entitlement amount is decreased if you already have a portion of it secured by a VA loan that you are presently repaying or if you previously defaulted on a VA loan. This restricts the amount you may withdraw without using your funds.
It’s challenging to predict when you should bring money down and how to calculate the down payment’s size, which we will address. We advise dealing with a Home Loan Expert if you have any problems because some of the arithmetic in this article is rather challenging.
Your entitlement may be decreased if you have already repaid a prior VA loan but still possess the home the loan used to buy. You may be eligible to request a one-time restoration of your entire entitlement in this situation.
The maximum loan limit for your county (which, in most regions, is $726,200 in 2023) will be utilized to determine your entitlement amount if you’re applying for a second VA home loan with a decreased entitlement.
Because the VA will only guarantee up to 25% of the loan, you will often only be eligible for $726,200 ($726,200 0.25 = $181.550), less any entitlements now encumbered by loans.
You must put down a down payment equivalent to 25% of the difference if the cost of the house you wish to purchase exceeds the amount the VA will guarantee.
How To Apply For A Second VA Home Loan?
In some cases, if your claim is lowered, it may be possible to have your entire entitlement back. The remaining entitlement will constrain you if this isn’t achievable.
Remember that when we say “restricted,” we don’t mean you can’t borrow more money than your entitlement will cover; instead, we suggest you won’t be able to borrow that much money without paying a down payment. This is because lenders usually demand that your entitlement, a down payment, or a mix of the two cover 25% of your loan amount.
Applying With Restored Entitlement
You’ll likely also need to sell the house if you previously had a VA loan that you’ve already paid off to get your entire entitlement back.
For homeowners who have paid off their previous VA home loan but still own the home they brought with the loan, the VA permits a one-time reinstatement of full entitlement. This is applicable if you have either paid off your VA loan in full and are now the sole owner of your house or if you have refinanced your VA loan into another loan type, such as a conventional loan.
You must submit an application to the VA for entitlement restoration. You may only employ this sort of restoration once; after that, you must sell the property as required by law to be eligible for a restoration of your claim.
Applying With Partial Entitlement
It is possible to have more than one VA loan at once if you receive PCS orders and need to maintain your present loan while taking out a new one for a property where you have been moved.
Remember that the amount of your entitlement that your present VA loan has already spent will set a restriction on it. Take your maximum entitlement and deduct the entitlement already utilized by your existing loan to see how much is still available.
The maximum amount you may borrow without a down payment is then found by multiplying that figure by four. A down payment of 25% of the additional loan is required if you take out a loan for more than this amount.
The Bottom Line
The most significant point is that there is no cap on the number of VA loans you can obtain over your lifetime, provided you are qualified and can get financing from a lender.
There are a few situations, though, where the amount you borrow without putting down a down payment may be restricted. You can have a lower entitlement or need to file for a one-time entitlement restoration if you want to seek another VA loan while still making payments on your present one.