Lose your VA loan ??
Good Evening,
I was wondering if you could ever Lose your VA loan.
Meaning ,
say you have been out of the Military for 10+ ears and have never used it ............. Do you have to use it by a certain number of years ?
Also please,
How does the " Buying Power " with a VA loan work ?
I have heard that you can purchase up to 4 homes with the loan ( Having lived in each home for 1 years time minimum , before you go on to buy the Second one , the third one , and the fourth one ) ?
Thanks so much for the help
Your VA entitlement never expires and can be used as many times as you like over your lifetime
Hi Michael,
To my understanding, as long as you are an honorably discharged veteran with the minimum amount of service, the VA Loan can be used forever. I currently have a VA LOAN on my property.
Here are some things to think about,
1. A VA Loan adds a "VA funding fee" which is a percentage of your purchase price that gets added on to the back of your mortgage. I believe mine was somewhere around $5,000 or somewhere around 2%. It ends up being a much better deal than having to pay PMI as $5,000 over 30 years comes out to less than $20 a month.
2. Consider #1 if you plan on doing a flip. I feel as though a VA Loan is better for buy and holds. Why add $5,000 onto a loan that you're trying to cash out in less than a year anyway? Sometimes it's better just to put cash down (some circumstances).
3. A huge problem I had with VA Loans are appraisals. At least in Maryland, there's very little inventory for a large amount of buyers. That tends to drive prices up and you need to make CERTAIN that an appraiser will come back with the right numbers considering you won't be putting anything down.
Either way, I think a VA Loan is a genius way to start house hacking. You can get into a property for 0$ down and have a tenant(s) pay your mortgage. The cash flow from what you previously paid in rent (that you're not paying now) for 0$ down is a no brainer.
Hope that helps, good luck.
@Michael Dunn first, thank you for your service.
1) you can't lose your VA loan.
2) Buying power is set by a certain amount per area (here in Maryland it's about 400K). You can only have one VA loan at a time unless you are PCSing and a couple other reasons but say you bought a 200K home, you'd only be able to use another 200K of your VA loan for the next house (unless you pay or refinance the first loan).
3) I wrote my story about using my VA loan on my blog, feel free to check it out: https://www.biggerpockets.com/blogs/8179/49220-vet...
Hope that helps!
Eric G. and Gabriel G. ,
Thank you to everyone for their replies
So in a sense , you could have 4 Properties at a Purchase price of $100,000 each ?
It would take 4 years to purchase all 4 properties ( Purchase Property #1 in year one ..... live in it for 1 year and then rent it out , Purchase Property #2 in year 2 , ..... wash/rinse/repeat ) ?
Is this basically the premise of how the process works
I also have heard , that they can be a bit strict , on which houses will qualify for the VA loan , and those properties that won't .
The house HAST TO BE in liveable condition ........ Can't even have the Stove missing or any shingles missing on the roof............... these type of " Small things ?
Thanks so much again for all of the help
Good evening.
I wanted to add one last note. If you are a veteran that is/has a service connected disability the VA funding fee is waived which definitely adds value to VA backed loans.
Tim
Many posters have already hit the highlights.
You earn your VA through service.
You receive a specific amount that can be used.
You cannot lose your VA unless there is an abuse
For the most part, you use your VA loan 1 at a time. You have to refinance it or sell the property and "release" it in order to use it again.
There ARE circumstances where you can have 1, and use it again. However using your VA for 4 different properties is probably not going to be approved by the VA. The overage idea is to allow for a vet who is transitioning to go from one house to another without requiring a sale prior to the next purchase. I have never known someone with 3 outstanding VA loans. I think this would probably be considered an excessive use of a program intended to help vets with housing after coming back from service.
Some other notable items about VA:
They are assumable loans. (However again, it would tie up the loan until it is paid off or refinanced)
They do not require mortgage insurance. So, that is a benefit that makes your mortgage payment less for putting 0 down.
Lastly, @Michael Dunn, Thank you for your service!
All good points. Here’s some more: you must owner occupy the property being financed thru VA home loans.
You CANNOT use more of your VA home loan on a second property without the first being paid/refinanced to another loan.
EX: you can va home loan a house for $100k but you must live in the home (or one unit of a duplex/triplex/4plex) for one year before you move out. You cannot use that extra $300k (the max is roughly $410k) on any other property. Once you refinance the property to a different loan OR pay it off you get the ability to use the VA home loan again, up to $410k.
So no, you cannot purchase multiple properties but can use it to acquire multiple properties if you live in it for a year and refinance the property to a different loan.
This is what I’ve learned about the process. Ian not a definitive expert.
Michael Dunn most of the information I’ve read here is correct but there is a few misconceptions I’ve seen.
You can have more than one VA loan at once. This is called “second tier” entitlement, most lenders are not even aware of it so make sure you get your second loan through a VA specialist. You can only have up to two at a time. You also have to show that you are moving out of the previous home for a good reason (PCS or outgrew, etc.).
You can “restore” your used entitlement by paying off your loan (refinance) then applying to get it restored. Go here for restoration instructions as well as obtaining your certificate of eligibility:
https://www.benefits.va.gov/homeloans/documents/docs/veteran_registration_coe.pdf
You may only restore benefits once if you retain your property as a rental. If you completely sell or off you can restore your benefits completely. The loan was never meant to be used as an investment vehicle though it can be used so if you are smart about it.
As far as VA loan appraisal goes, there are Minimum Property Requirements (MPRs) that a VA loan requires - basically safe, sound and sanitary. This makes it difficult to purchase a distressed home because it has to be in pretty good shape - only superficial problem. The buyer is not allowed to pay for repairs under the terms of the VA loan.
Hey @Michael Dunn a few of the comments above are not accurate. You can purchase multiple homes using the VA loan as long as they are your primary residence at the time of purchase. PCS'ing does not play a role in this at all and I have never heard anything about having to wait one year. It is all about your "VA Entitlement". This is essentially your loan limit. The standard is $417,000 however in areas with high cost of living, this limit goes up and varies by county. In my county in MD the loan limit is $517,000. The limit actually goes up if you are purchasing a multi-unit. Here is a PDF from the VA's website breaking down the loan limits for this higher cost of living counties. https://www.fhfa.gov/DataTools/Downloads/Documents...
You can have multiple loans out as long as it does not exceed the maximum loan limit for your county. With my $517K loan limit I was able to purchase a home for $210K then move out and purchase a second home for $240K. Now a lender typically won't give you a second loan unless you have renters in your first home paying down your initial mortgage. My lender required 3 months of rental income. So I moved out, rented out my house and I rented out a townhome my self while house hunting for my second home.
So fi your loan limit is $417, your goal should be to buy two homes for $200K each. Another thing to point out is just because your max loan limit might be $417k does not mean you will actually qualify for that amount. You will still need a good credit score, debt to income ration and monthly income. Also, you can purchase above your VA loan limit but you will need to pay 25% down on anything above the loan limit. Start talking to a lender about these things and see if they personally have any requirements for renting out your first home and
Thank so so very much for everyone's help
Tremendous amount of great information
Originally posted by @Malcolm Lawson:
Hey @Michael Dunn a few of the comments above are not accurate. You can purchase multiple homes using the VA loan as long as they are your primary residence at the time of purchase. PCS'ing does not play a role in this at all and I have never heard anything about having to wait one year. It is all about your "VA Entitlement". This is essentially your loan limit. The standard is $417,000 however in areas with high cost of living, this limit goes up and varies by county. In my county in MD the loan limit is $517,000. The limit actually goes up if you are purchasing a multi-unit. Here is a PDF from the VA's website breaking down the loan limits for this higher cost of living counties. https://www.fhfa.gov/DataTools/Downloads/Documents...
You can have multiple loans out as long as it does not exceed the maximum loan limit for your county. With my $517K loan limit I was able to purchase a home for $210K then move out and purchase a second home for $240K. Now a lender typically won't give you a second loan unless you have renters in your first home paying down your initial mortgage. My lender required 3 months of rental income. So I moved out, rented out my house and I rented out a townhome my self while house hunting for my second home.
So fi your loan limit is $417, your goal should be to buy two homes for $200K each. Another thing to point out is just because your max loan limit might be $417k does not mean you will actually qualify for that amount. You will still need a good credit score, debt to income ration and monthly income. Also, you can purchase above your VA loan limit but you will need to pay 25% down on anything above the loan limit. Start talking to a lender about these things and see if they personally have any requirements for renting out your first home and
Hey Malcom,
Can you touch on the multifamily increasing the VA loan limit? I thought I read in the underwriting that for VA loans you can only consider the single unit limit as like a side note. But as you have mentioned, I have seen others refer to higher limits on multis with VA loans. Has anyone actually utilized it?