Yes, you can use a VA home loan more than once. The Department of Veterans Affairs (VA) allows eligible veterans, active-duty service members, and certain surviving spouses to use this beneficial loan program multiple times throughout their lives. This flexibility makes the VA home loan a valuable option for those who may need to move or refinance in the future.
Loan Entitlement and Restoration
One of the key factors that enable borrowers to use a VA home loan multiple times is the loan entitlement. Each qualifying individual is entitled to a specific amount of loan guarantee, which represents the portion the VA will repay the lender in case of default. The basic entitlement amount is currently $36,000, and it can be used to purchase or refinance a home with a value of up to $144,000.
In some cases, borrowers may have less than the full entitlement available due to a previous VA loan that is not yet paid off. However, the VA has a process called restoration, which allows individuals to regain their full entitlement once they sell or pay off the property bought with a VA loan. This restoration makes it possible to utilize the VA home loan benefit again.
Using Remaining Entitlement
If you have used a portion of your entitlement but still have some remaining, you can leverage it for another VA loan. The remaining entitlement can be used to purchase a new home or refinance an existing one. Keep in mind that the VA will guarantee a maximum loan amount based on the available entitlement and the lender’s guidelines.
For loans over $144,000, the VA generally provides a guarantee of 25% of the loan amount up to the county loan limit. This means that if the county limit is $548,250, the VA will guarantee 25% of that amount, which is $137,062.50. With this guarantee, borrowers can secure a loan that exceeds $144,000, making it possible to purchase higher-priced properties.
Using Second-Tier Entitlement
In certain situations, borrowers may have used their full entitlement or have an existing VA loan that cannot be paid off at the moment. However, they might still be eligible for another VA loan by utilizing second-tier entitlement. The second-tier entitlement, also known as bonus entitlement, provides additional loan guarantee above the basic entitlement.
The calculation of the second-tier entitlement can be complex, but it essentially allows borrowers to secure a VA loan even with a reduced or exhausted basic entitlement. The amount available for the second-tier entitlement depends on the county loan limit and the remaining entitlement after utilizing the basic entitlement. It’s important to work with a knowledgeable VA lender to determine your eligibility and entitlement options.
Using the VA Jumbo Loan
For veterans who wish to purchase homes that exceed the county loan limit, the VA offers a jumbo loan option. The VA jumbo loan is a beneficial alternative that allows borrowers to finance higher-priced properties while still benefiting from the advantages of a VA loan, such as no down payment and competitive interest rates.
With this type of loan, borrowers can combine their remaining entitlement and a down payment to secure financing for a home above the county loan limit. The specific down payment required will depend on the loan amount and the remaining entitlement. It’s crucial to consult with a VA-approved lender to determine the down payment amount and eligibility criteria for the VA jumbo loan.
Refinancing with a VA Loan
Another way to use a VA loan more than once is through refinancing. The VA offers several refinancing options, including the Interest Rate Reduction Refinance Loan (IRRRL) and the Cash-Out Refinance Loan. These refinancing programs enable eligible borrowers to replace their current mortgage with a new VA loan, either for lower interest rates or to access their home’s equity.
By refinancing an existing VA loan, borrowers can utilize their entitlement again, provided they meet the eligibility requirements of the refinancing program. This allows borrowers to potentially lower their monthly payments or tap into their home equity for various financial needs.
In conclusion, the VA home loan program provides the flexibility for borrowers to use the loan multiple times. Through the restoration of entitlement, remaining entitlement utilization, second-tier entitlement, jumbo loan option, and refinancing programs, eligible individuals can take advantage of their VA loan benefits throughout their lives. Whether you need to purchase a new home or refinance an existing one, the VA loan program offers valuable opportunities for veterans, active-duty service members, and certain surviving spouses.