How Many Times Can You Use A Va Loan

VA loans are excellent financial tools for homeownership – but the benefits don’t stop there. Borrowers can use VA loans for multiple home purchases and enjoy the same low interest rates and full access to home equity in more than one house.

Qualifying for a second VA loan isn’t automatic, but it is worth it. How many times you can use a VA loan depends on your past VA loans, VA entitlement amount, and location. Here are the details on using more than one VA loan.

A VA loan is a home loan exclusively for veterans, active military members, and qualifying surviving spouses. Provided and backed by the U.S. Department of Veterans Affairs (VA) through numerous banks and lenders, VA loans have lenient financial requirements. As a result, applicants with a debt-to-income ratio of 60% or lower and an average credit score of 580 or higher can qualify for a VA loan.

VA loans are financially beneficial because you don’t need a down payment or mortgage insurance. In addition, VA loans usually have low interest rates and allow homeowners to access 100% of their home equity if they refinance.

VA loans have stipulations for who can apply. Specifically, you must fit one of these conditions to obtain a loan:

• Served at least 181 days of active service during peacetime.
• Served at least 90 consecutive days of active service during wartime.
• Served over 6 years with the National Guard or Reserves or 90 days under Title 32, 30 days of which were uninterrupted.
• Be the spouse of a service member who became deceased because of military activity or duty-related disability.

VA entitlement is how much the VA will reimburse your lender if you default on your loan. Entitlement also determines the amount you can receive through a VA loan without making a down payment.Current law allows borrowers with full entitlement to get a loan of any size without making a down payment. As a borrower, you have full entitlement if you’ve never had a VA loan in the past or you’ve completely repaid your last VA loan and sold the property you bought with the loan.However, you might have reduced entitlement if you fit one of the following situations:

• You have a VA loan you haven’t paid in full.
• You still own the house from your fully repaid VA loan.
• You defaulted on a past VA loan.

Reduced entitlement means the VA might guarantee a lower amount for a new loan, impacting your ability to purchase or refinance a home. Understanding full versus reduced entitlement can be tricky, so here are more details on how entitlement works:

• Basic Entitlement: If your certificate of eligibility states that your basic entitlement is $36,000, you have full entitlement. This dollar amount is not the maximum you can borrow – it’s a benchmark figure for 25% lender reimbursement for a $144,000 loan.

However, basic entitlement doesn’t limit borrowing to $144,000. If you surpass this limit, you receive bonus entitlement.

• Bonus Entitlement: If you want a property that costs more than $144,000, bonus entitlement will allow you to purchase it. In addition, the VA guarantees 25% of the loan amount if you have full entitlement, eliminating the need for a down payment.

On the other hand, if you have reduced entitlement, the VA will guarantee 25% of your county’s conforming loan limit minus the dollar value of your current VA loan. The baseline conforming loan limit for 2023 is $715,000, but yours will vary based on location.Remember, if your certificate of eligibility lists your entitlement as $0, that doesn’t prevent you from getting a loan. Instead, it indicates that you’re already using the $36,000 of basic entitlement and that you’ll need bonus entitlement to obtain a loan. As a result, bonus entitlement is vital to using a VA loan more than once.

You can use a VA loan as many times as you’d like as long as basic or bonus entitlement is available. But, again, a past VA loan doesn’t necessarily mean you can’t get another one in the present because paying off your loan and selling your property restores your basic entitlement. Conversely, a loan you’re in the middle of paying or have defaulted on may only reduce your entitlement rather than eliminate it altogether.

If you have a VA loan and want to figure out how much reduced entitlement you can access, multiply your current loan by 0.25. For example, a loan of $200,000 would mean that you are using $50,000 of entitlement. As a result, you’ll need to access bonus entitlement since you have surpassed the basic entitlement threshold of $36,000. And in this scenario, the VA will likely constrain your loan to 25% of your municipality’s conforming loan limit.

Continuing with our example, let’s say you want another VA loan in a region using the baseline conforming loan limit of $715,000. Therefore, the VA will guarantee 25% of this figure minus the entitlement you’re already using. So, $715,000 x 0.25 is $178,750. Subtracting your used entitlement of $50,00 gives you $128,750 of available entitlement. In other words, the VA will use $128,750 as its 25% guarantee for a new loan.

Because the VA considers $128,750 as 25% of a new loan, multiply $128,750 by 4 to get the total you can borrow: $515,000 in a new loan. As long as you can afford VA funding fees, covered in the next section, you can obtain another VA loan with the available entitlement.

Funding Fees 

VA funding fees are one-time payments from the borrower to the VA to acquire the loan and usually increase each time you obtain a VA loan. Generally, funding fees are between 0.5% and 3.6% of the loan amount and are part of your closing costs.

Funding fees may vary depending on military status, down payment, and the number of times you have already used entitlement. However, borrowers may be exempt from paying the VA funding fee due to a service-connected disability.

Eligible service members and veterans can use their remaining entitlement, also called second-tier entitlement, if they have basic or bonus entitlement available. Usually, you’ll use a VA loan in one of the following situations:

• Service members are required to relocate for duty. If you have orders to relocate permanently, you have a few options: you can sell your house and repay your loan to restore basic entitlement. Or, you can keep your house, rent it out, and use reduced entitlement for a second VA loan.
• Former VA borrowers lost their homes due to foreclosure. Defaulting on your loan and losing your home doesn’t mean you can’t get another VA loan. Reduced or second-tier entitlement can help you start again.

Remember, borrowers can obtain full entitlement when they pay off their original loan. Full entitlement gives you access to the largest loans available, meaning entitlement won’t be an inhibiting factor when you look for a new home.

How To Restore VA Loan Entitlement

A borrower who doesn’t qualify for reduced or second-tier entitlement must restore their VA entitlement before purchasing another home.

You can restore VA loan entitlement by:

• Selling your home and paying your mortgage in full.
• Selling your property to a qualified veteran or service member who will assume your VA loan.
• Applying for a one-time VA Restoration of Entitlement if you’ve paid off your first property or refinanced your home to a non-VA loan.

If you’re eligible, buying a home with a VA loan is usually a good idea because you receive lifelong benefits of homeownership without needing excellent credit, a down payment, or mortgage insurance payments. Plus, you’ll often get a lower interest rate than a conventional loan and access to 100% of your home equity, a feature unique to VA loans.

Therefore, if your full or remaining entitlement enables you to use a VA loan for your home purchase, a second VA loan will likely be more financially advantageous than a conventional loan. In addition, if it’s possible to restore your entitlement sufficiently to get a second VA loan, it’s usually worth the work.

That said, a second VA loan might not be necessary or optimal for you in specific situations, including:

• You have an excellent credit score and can qualify for a lower interest rate on a different type of loan, such as a conventional loan.
• You don’t have enough remaining VA loan eligibility and want to keep your first home.

Buying a second home is a hefty financial decision, so it’s wise to consider all your options before making a commitment.

You can use a VA loan multiple times for home purchases if you have enough remaining entitlement or pay off your first loan and sell your property. In addition, VA loans are among the most favorable mortgages available, making them excellent choices for getting your dream property plus unique financial benefits, such as low interest rates and no down payment.

However, it’s crucial to check whether your currently used entitlement prevents you from obtaining another VA loan and doing what you can to restore entitlement if necessary.

If you’d like a second VA loan, discuss your plans with a mortgage lender to determine how to use your benefits today.