Yes, it is possible to have two VA home loans under certain circumstances. The Department of Veterans Affairs (VA) allows eligible veterans and active-duty military personnel to obtain more than one VA loan during their lifetime, but there are specific requirements and conditions that need to be met. Let’s explore the details of having two VA home loans and the criteria involved.
Using Remaining Entitlement for a Second VA Loan
When considering obtaining a second VA home loan, it’s essential to understand the concept of remaining entitlement. Every eligible veteran or service member is initially given a basic entitlement of $36,000, which means the VA guarantees up to 25% of the loan amount if the borrower defaults. In most cases, this translates to a loan limit of $144,000 (4 x $36,000). However, if the first VA loan is paid off or the property is sold and the loan is fully satisfied, the entitlement can be restored, allowing for a second VA loan.
Here’s an example to make it clearer:
|Type of Entitlement
In the scenario above, if the borrower has fully repaid their first VA loan or sold the property securing the loan, they can utilize the remaining entitlement to obtain a second VA loan.
Entitlement Amount and Loan Limits
The loan limit may vary depending on the location of the property. The VA allows borrowers to obtain a second VA loan above $144,000 (after restoring the entitlement) by applying for an additional entitlement, commonly referred to as the bonus entitlement. By combining the basic and bonus entitlements, borrowers can secure larger VA loans.
The exact loan limit for a second VA loan depends on the county loan limit set by the Federal Housing Finance Agency (FHFA). In some high-cost areas, borrowers may be able to secure VA loans without a down payment, as the loan limits are higher. However, it’s important to note that using the remaining entitlement and acquiring a second VA loan may require some down payment in certain cases.
Occupancy and Loan Eligibility
Another critical aspect of having two VA home loans is meeting occupancy requirements. The first VA loan must be utilized for the borrower’s primary residence. However, the occupancy requirements differ for a second VA loan:
- If the first property is sold and the loan is fully paid, the second VA loan can be used to purchase another primary residence.
- If the first property still has a VA loan on it, the second VA loan can only be used for another primary residence if there is a significant increase in the borrower’s family size or a change in duty station that requires relocation.
- In cases where the first property still has a VA loan, but the borrower intends to rent it out, it may still be possible to obtain a second VA loan for another primary residence if the VA Regional Loan Center approves.
Applying for Multiple VA Loans Simultaneously
While having two VA loans consecutively is possible, applying for multiple VA loans simultaneously is generally not allowed. However, there are exceptions to this rule:
- If the borrower is transferring their remaining entitlement to the new VA loan, simultaneous loans may be permitted.
- Building a new house using VA benefits while having an existing VA loan is also allowed in some cases.
Refinancing a Second VA Loan
Refinancing can be a viable option for borrowers with two VA loans. The VA offers the Interest Rate Reduction Refinance Loan (IRRRL) specifically for refinancing existing VA loans. It allows borrowers to replace their current loan with a new one that has a lower interest rate or switch from an adjustable-rate mortgage to a fixed-rate mortgage, for instance.
However, it’s important to remember that refinancing a second VA loan may require the borrower to have some remaining entitlement left. If the entitlement is fully utilized, additional down payment may be necessary to refinance the second VA loan.
In conclusion, it is possible to have two VA home loans, as long as certain criteria are met. Understanding the concept of remaining entitlement, loan limits, occupancy requirements, and other factors can help eligible veterans and active-duty service members explore the option of obtaining a second VA loan.