From 0% down payment options to competitive interest rates to no mortgage insurance payments, there are many VA home loan benefits. If you’re a service member or veteran, you might be wondering how many times you can use a VA loan. This article will tell you everything you want to know.
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What is VA Entitlement?
Before we can dive into how many you can use a VA loan, we’ll need to go over VA entitlement. Every eligible VA member is entitled to a certain amount of money from the U.S. Department of Veterans Affairs to buy a home.
The exact amount of entitlement you’ll get depends on the county loan limits where you’re purchasing the home. Mortgage lenders usually give loans worth up to 4 times your available entitlement without requiring a down payment, as long as you meet their income and credit requirements.
For example, in many areas of the country, you’ll get a total entitlement of $106,025. Since lenders will usually lend 4 times your entitlement, you could buy a house worth up to $424,100 without having to make a down payment.
When you buy a home with a VA loan, you’ll be “cashing in” some or all of your VA entitlement. In order to restore that entitlement for future home purchases, you’ll usually need to sell your house and pay off the loan in full. You’ll also need to submit some reinstatement paperwork to the VA beforehand.
So is there a limit on how many times you can use a VA loan?
There’s no limit to the number of times you can restore your full entitlement and get a new VA loan. That is, as long as you meet the program’s eligibility requirements for each home purchase. For example, you must be purchasing a primary residence since investment properties aren’t VA-eligible. You’ll also need to meet your lender’s financial requirements and have enough entitlement for the home you plan on buying, as we mentioned earlier.
There are, however, some additional details to keep in mind. If you’ve had a short sale, foreclosure, or bankruptcy, you may have to wait for one to two years before you can buy a home with a VA loan again. You may also lose that portion of your VA entitlement, which could be a limitation if you don’t have enough left over.
If you’ve bought a VA loan home in the past, you can expect your upfront VA funding fee to be a bit higher the next time around. The VA typically charges borrowers this fee to cover the cost of the loan program. Your funding fee is a certain percentage of the loan amount. The exact percentage depends on your military status, down payment amount (if any), and if you got a VA loan before.
Can I have two VA loans at one time?
Though uncommon, it can be possible to have more than one VA loan home at the same time. The simplest case is if your VA mortgage is already paid in full. You may be able to get one-time permission to restore your entitlement and keep the home as a rental property.
The VA may also allow a one-time exception if you need to buy another home due to specific circumstances. For example, let’s say you receive a permanent change of station (PCS) order and have to move to a different city.
In this scenario, you may be able to get permission to use your remaining entitlement and buy a new home without having to sell your old home and pay off the loan. (If you don’t have enough entitlement remaining, you might have to make a down payment to cover the gap.) However, even if you get the VA’s approval, your lender will still be looking to see if you’re financially able to handle two mortgages at once.
Tip: If you sell your house to a fellow veteran who has enough entitlement, they can assume your VA loan and free up your own entitlement. A non-VA home buyer can also assume your loan, but they must pay off the mortgage before your entitlement can be restored.
The bottom line
There are a ton of VA loan benefits, so you’ll be glad to know that there’s no limit to how many times you can use a VA loan. While the process of restoring your entitlement to get another VA loan is relatively straightforward, the timing of it all can get tricky. You’ll need to sell your home and then get your entitlement restored before you can buy your new house with a VA loan. You’ll also be required to occupy the new property within 60 days of closing (up to 12 months in individual cases) which could further complicate your timeline.
The good news is that you can buy and sell your VA-backed home on your schedule by using a service like Orchard. We’ll give you an offer on your current house that’s valid for up to 6 months, giving you plenty of time to find your new dream home. We’ll also help line up your closing dates, so you can avoid potential entitlement issues and occupy the house on time. Learn more about Orchard’s Buy and Sell service here.
Want to chat with our team about how Orchard can help you buy or sell a home with a VA loan? Give us a call at 844-819-1373.