The VA loan benefit is a powerful tool for eligible veterans, service members, and their families. It offers a path to homeownership, often with no down payment. But a common question arises: can you have two VA loans? This post addresses this question and explores using your VA loan benefit more than once.
This can be confusing. We’ll clear up common misunderstandings about getting a second VA loan. We’ll cover various scenarios and situations around VA loans. We’ll provide practical advice and share personal experiences to shed light on how this benefit works.
Table of Contents:
- Understanding VA Loan Entitlement
- Can You Have Two VA Loans Simultaneously?
- Using Remaining Entitlement
- VA Loans After Foreclosure
- Conclusion
Understanding VA Loan Entitlement
Before we answer the core question—can you have two VA loans—let’s understand VA loan entitlement. This is the dollar amount the Department of Veterans Affairs guarantees on a VA mortgage if a veteran defaults.
This guarantee incentivizes VA lenders to offer better loan terms. It often eliminates the down payment requirement. The entitlement amount can change due to several factors.
Basic and Bonus Entitlement: The Two-Tier System
The VA entitlement system has two levels. Your basic entitlement is typically $36,000, covering loans under $144,000 in most counties.
Bonus entitlement is for loans exceeding $144,000. This falls under secondary entitlement rules.
Many assume their VA entitlement is their total loan amount. However, it’s the portion the VA guarantees, usually 25% of the conforming loan limit.
Higher VA loan limits exist in high-cost areas. This allows veterans to obtain larger loans with 0% down in those counties.
Your maximum VA loan amount depends on county limits and your qualifications. These include your creditworthiness, debt-to-income ratio, income, assets, and residual income.
Can You Have Two VA Loans Simultaneously?
Yes, you can have two VA loans concurrently. The circumstances allowing this are specific and restrictive.
PCS Orders: A Common Scenario
The most common scenario for two simultaneous VA loans is Permanent Change of Station (PCS) orders. If your military service requires you to buy a new residence, and your previous home hasn’t sold, two VA-backed mortgages are possible.
Meeting Requirements: Juggling Two Mortgages
You can get a new VA mortgage with an existing one. However, most lenders enforce occupancy requirements. This means designating the new property as your primary residence.
VA rules don’t allow purchasing secondary residences or vacation properties. You would have to convert your previous primary residence to a secondary residence and rent it out.
This can be challenging in a high mortgage-interest environment.
Using Remaining Entitlement
Can you have two VA loans if you’ve already used your entitlement? Yes. The VA loan benefit is not a one-time deal.
You can reuse it as long as you have remaining entitlement.
Calculating Remaining Entitlement
To calculate your remaining entitlement, subtract the entitlement used for your current VA loan from your maximum entitlement.
Your maximum entitlement is your county loan limit times 25%. Multiply this result by four to find your potential mortgage amount. This is subject to lender approval and market conditions.
VA Loans After Foreclosure
Sometimes, veterans face foreclosure on a VA-backed home. Foreclosure doesn’t automatically disqualify you from future VA loan benefits.
You can re-apply for a VA loan two years after foreclosure. Be prepared for additional scrutiny and potential challenges.
Calculations regarding your entitlement and any amount tied to your previous loan foreclosure or short sale can be complex. Seek assistance from a VA lender if needed.
Conclusion
Can you have two VA loans? The answer is a conditional yes. It’s possible with PCS orders or remaining entitlement.
Consider location loan restrictions and your individual finances, including managing two monthly mortgage payments and VA funding fees.
Obtaining a second VA loan can be a complex process. Consulting with a VA lender, like Veterans United, can provide clarity and guidance.
Be prepared for unexpected hurdles on your VA loan path.
