Yes, it is possible to obtain a second VA home loan. The Department of Veterans Affairs (VA) provides this benefit to eligible veterans, active-duty servicemembers, and surviving spouses. However, there are certain factors to consider and requirements to meet when applying for a second VA home loan. Let’s explore the details below.
1. Remaining Entitlement
One crucial factor to obtaining a second VA home loan is ensuring you have remaining entitlement. The VA guarantees a certain portion of each VA loan, known as your entitlement. Your remaining entitlement is the amount left after using your entitlement for a previous VA loan. Before applying for a second loan, it’s essential to determine if you still have sufficient remaining entitlement to qualify.
2. Loan Limits and Your VA Entitlement
VA loan limits play a role in determining how much you can borrow with a second VA home loan. The VA sets loan limits based on the county where the property is located. In most areas, the loan limit aligns with the conforming loan limit set by Fannie Mae and Freddie Mac, which is $548,250 in 2021 for most parts of the United States.
Your available VA entitlement helps determine how much you can borrow without a down payment. The VA typically guarantees up to 25% of the loan amount or up to the loan limit, whichever is less. If your remaining entitlement allows, you may be able to secure a second VA home loan without a down payment, even if you had previously used your entitlement.
3. Meeting Lender Requirements
Aside from meeting the VA’s eligibility requirements, you must also meet the lender’s qualification criteria to obtain a second VA home loan. Lenders will review various factors, including your credit score, debt-to-income ratio, employment history, and more. It’s crucial to maintain a good credit score and demonstrate your ability to handle the additional financial responsibility.
4. Selling or Refinancing Your Current VA Loan
Prior to obtaining a second VA home loan, you may need to sell your current VA-backed property or refinance it into a conventional loan. This step is necessary since the VA entitlement you utilized for your current VA loan must be restored to its full amount before applying for a second loan. Consult with your lender to explore the best course of action based on your specific circumstances.
5. Using Second-Tier Entitlement
If you have utilized your entire basic entitlement and still want to pursue a second VA home loan, you may have the option of using second-tier entitlement. Second-tier entitlement is available for loans above the conforming loan limit, generally targeting high-cost areas where loan limits exceed the standard threshold. It is important to work closely with your lender to determine if this is a viable option for your situation.
In conclusion, it is possible to obtain a second VA home loan, but it depends on various factors such as your remaining entitlement, loan limits, meeting lender requirements, and more. Before pursuing a second loan, it is recommended to consult with a qualified VA loan specialist and discuss your specific situation to ensure you meet all the necessary criteria for a successful application process.