How Many VA Loans Can You Have?

How Many VA Loans Can You Have?

One of the greatest perks of being eligible for a VA loan is that it's a lifetime benefit. You can take out a VA loan again and again as you move on orders or want a different house.

In most cases, you can only have one active VA loan at a time since this type of mortgage is for primary residences only. In certain situations, however, you can have two VA loans overlap for a limited time—you'll just have to put some money down.

Also, be aware that if you're putting down less than 5% of the purchase price of the house, the VA funding fee is higher after your first use of a VA loan. In other words, you'll enjoy a low funding fee—currently 2.15%—with little to no down payment the first time, but for subsequent VA loans, you'll pay more—3.3%.

If you choose to put down 5% or more, you'll pay lower funding fees regardless of whether it's your first time using your entitlement or not.

Learn more: VA Loan Requirements

What Is VA Loan Entitlement?

A key VA loan requirement is that before approaching a lender, you must obtain a Certificate of Eligibility (COE) from the government. If you receive a COE, it will contain your entitlement amount, which indicates the maximum amount the VA will allow you to borrow without making a down payment.

There are two types of entitlement:

Full Entitlement

Full entitlement means you can take out a VA-backed mortgage on a home, regardless of its price tag, without paying a down payment. However, with this VA loan benefit, you still must be able to qualify and afford the loan payments.

First-time VA loan users start off with full entitlement. You may be able to restore full entitlement if:

• You previously took out a VA loan but have paid off the loan and sold the home purchased with it (there is a one-time option you can tap if you've repaid the loan but not yet sold the home)
• You find another qualified veteran who agrees to take over paying your VA loan and they swap their VA entitlement for your original loan amount

When you have full entitlement, the VA will guarantee up to $36,000 for loans under $144,000, and 25% of loan amounts beyond that.

Second-Tier Entitlement

If your full entitlement isn't available to you, that doesn't mean you can't borrow with a VA loan—you can, and there's not a limit on the price of the home you can buy. That said, if the mortgage is greater than how much entitlement you have left, you'll need to make a down payment.

Lenders typically require that your remaining entitlement, down payment or both combined cover at least 25% of the total loan amount. You can still buy a home of any amount, but the VA will only guarantee up 25% of the conforming loan limit in your county, then subtract how much of your entitlement is gone.

Example: You have a second-tier entitlement and want to purchase a home for $500,000. Your VA entitlement, when added to your down payment, must total at least $125,000 to receive full VA guarantee.

Yes, this process can be complicated and confusing, but the key point is that if you have reduced entitlement, you will likely be required to provide a down payment to buy a home with a VA loan. You might be in this situation if:

• You want to buy a home with a VA loan before you've sold your prior home (whether you plan to sell it or keep it and rent it)
• You defaulted on a VA loan in the past

Scenarios When You Need to Get a Second VA Loan

VA loans can only be used to buy a primary residence, so you typically can't have more than one active VA loan at time. However, you may be able to get two VA loans at once in the following situations.

Keeping Your Current Home and Buying Another

It is possible to buy another home with a VA loan if you want to keep the existing one, but the newly purchased home must be your residence. In other words, it cannot be a vacation home or investment property. If the new home is valued over $144,000, you must also prove that you can afford paying both loans at the time of closing.

Buying After Defaulting on a VA Loan

If you had a VA-backed loan but went into default and experienced foreclosure, you may be eligible to get another VA loan with second-tier entitlement after two years.

VA Mortgage Assumption

Say you bought a home in an area with heavy military presence, and you expect to have no problems finding a buyer who also plans to use a VA loan. A policy allows you to restore your full entitlement by having a different qualified veteran assume your loan, meaning they take over payments. To do this, they will substitute their VA entitlement for the amount of your original loan.

Make sure this person is trustworthy, since if they default on the assumed loan, it counts against your entitlement and can make it harder to get a VA loan again in the future.

PCS Orders

When you receive orders for a permanent change of station (PCS), it's often hard to sync up timing on selling a home in one place and purchasing a new one elsewhere. For this reason, you're permitted to have two VA loans at the same time for primary residences due to a PCS.

It's only temporary, though: VA loan rules won't allow you to keep both houses for longer than a year.

How to Get a Second VA Loan

If you've already used a VA loan and want to tap that resource again, here's how to get started.

1. Restore Your Full Entitlement

If you took out a second VA loan but have paid off the first loan and sold the home, apply for restoration of your entitlement before you apply for the second loan. This will put you back at your full entitlement, meaning no down payment will be required on the second loan.

Visit VA.gov, log in and fill out the form online. Alternatively, fill out VA Form 26-1880 and send it to the VA regional loan center for your state.

2. Get an Updated COE

Remember the COE you had to request the first time you obtained a VA loan? If you're unsure of how much of your entitlement you've used, request one again and check the amount listed for "Entitlement Charged."

3. Work With a VA-Approved Lender

Whether you go to the same lender as before or another one that works with VA loans, reach out and obtain quotes. Once you've selected the best offer, get prequalified so you know how much house you can afford. If you have any questions or concerns about your entitlement, or if you want to see how a conventional loan compares, ask your lender for support.

Learn more: The Complete Guide on How to Get a Mortgage

4. Buy the Home

Once you've gone home shopping and found your dream home, you'll submit the offer, receive your VA loan and close on the property.

Your Credit Counts Too

While the amount of VA loan entitlement you have left plays a significant role in whether you need a down payment, many other factors go into your loan's terms. When your credit score is higher, you're more likely to qualify for a lower interest rate, so make sure to review your credit report for free on Experian to see if you need to make any improvements.