It is possible to have multiple VA loans!!

22 Replies

***THIS IS SOME GOOD INFO I FOUND***

Can I Have 2 VA Loans At One Time? YES!
In some cases you can have two. Veterans and active duty military with a VA Home Loan might be surprised to know that they can qualify to purchase a home with a second VA Loan based on what's called their Second-Tier Entitlement.
While there's plenty to know about the VA Loan for those just looking to use it the first time, there's a lot of information about using two VA Loans simultaneously.
A lot of vets think they can only use their VA Loan once and they're trying to save their VA Loan benefit when they don't have to. The VA does allow for having two VA Loans at the same time, as long as the max entitlement is not exceeded. Also, the borrower must qualify for the second loan and in some cases, may need two years of rental history on the first home to offset the mortgage payment when trying to get qualified income-wise to purchase a second home.
First let’s explain the difference between entitlement and maximum loan amount.
Each borrower using a VA Loan has a $36,000 entitlement that the VA guarantees to the lender in the unfortunate event that a borrower would default on the loan. The VA's formula dictates whether or not all that entitlement is used with the initial loan, and thus, additional entitlement can be available. And even if the entitlement is $0 after the purchase of the first house, then the Veteran or active duty member can still use their second-tier entitlement, but there will be a standard minimum and maximum loan limits on what the borrower can use to buy that second house.
Where does the $36,000 come from? This is 25% of 144,000, the "old" maximum loan amount for VA loans.
The VA now has County maximum loan limits as high as 768,750 in the DC Metro Area. With that loan amount, your 25% guarantee is 192,187.50 in entitlement.
"Second-Tier entitlement is nice because for those people using it, it means they don't have to sell their (first) property right off the bat when obtaining the second VA Loan. However, they still have to qualify for the VA Loan. While Second Tier Entitlement is not widely used because of its complexity and the fact that plenty of lenders are not well versed in calculating it, does not mean that interested borrowers should wave the white flag and look elsewhere for a different home loan.
There are a lot of people that don't know about it or are misinformed, lenders included. But there are those out there, that know about second-tier entitlement and how to calculate it, and are comfortable working with it.
If you're in a VA Loan already and thinking about using your VA Loan again, call a VA Loan Specialists to learn more about your second-tier entitlement.
An Example of calculating second-tier entitlement:
Veteran has used $104,250 of entitlement on a prior loan, which may not be restored because the loan is still active and is now a rental due to orders to transfer. The Veteran is now purchasing a home for $350,000 where the county loan limit is $768,750.
$768,750 (County Loan Limit) X 25% (your VA guaranty) = $192,187.50 Maximum Guaranty
$192,187.50 - $104,250 (entitlement already used for active VA loan) = $87,937.50 Entitlement Available
$87,937.50 X 4 = $351,750 Maximum Loan Amount with 25% Guaranty – Since the proposed purchased price is less than the max loan amount, no down payment would be required.
If the Veteran would like to purchase a home for 400,000 using the same numbers above, they would be required to bring $12,062.50 as a down payment to meet the 25% guaranty.
400,000 x 25% = 100,000 needed entitlement/guaranty – 87,937.50 available = 12,062.50 difference needed by Veteran to meet lender requirement.

For a list of county loan limits, go to:
http://benefits.va.gov/homeloans/documents/docs and click on current county rates.

Yes, I think many don't know and/or have lenders who just don't know. I literally got this reply from my lender on Monday when I asked about subsequent VA entitlement when the first loan has not been paid off.

(However, there is no entitlement at $768,750 in the DC metro area.  Click here for revised 2014 limits for VA loans that close through Dec 31, 2014.)

 You can obtain a second VA loan for the purchase of new home without having first paid off the current VA loan. There are some requirements that have to be met in order to obtain the second VA loan. Eligibility for 100% financing on the new VA loan is determined by the amount owed on the current VA loan, amount of the new VA loan, and the max VA loan limits for the county the new property is being purchased in. [Husband] would undoubtedly have some VA loan benefit entitlement remaining but not enough entitlement to purchase a new home in this area without putting a considerable amount of cash down. The others requirements are related to the distance from the current property to the new property and whether or not it makes sense as a new primary residence. If purchasing a much less expensive property in another state, the second VA loan could possibly be the best option but if purchasing locally a property at a price that is in the same ball park or higher than what you owe on your current VA loan, VA either won’t be an option or won’t be the best option. 

One factor that could make VA a less attractive option is the funding fee for subsequent use. The VA funding fee for a veteran using their benefit to purchase a home for the second time is 3.3% of the loan amount if putting less than 5% down and 1.25% if putting 10% down or more. I think if you are comfortable with at least 10% down, it’s definitely worth comparing the VA option to a conventional loan option w/ 10% down and you are much more likely to have enough VA eligibility to purchase a suitable property with 10% down than with anything less than 10% down. You can obtain a conventional loan with at least 5% down if the loan amount is 417k or less and with at least 10% down if the loan amount is between 417k and 625k. You can obtain an FHA loan for up to 625k with only 3.5% down. 

Excellent post. Have you been able to use yours twice Vince?

At one time I had 6 VA loans!

Now that I know this I am actively looking for my next opportunity to utilize VA. Even with the fees it is a great loan option. I just refinanced my current VA loan with no costs called an IRRRL (interest rate reduction refinance loan) and dropped my interest rate on my current project from 3.75 to 3.25%. So when I find another good SFH to invest in it will be a cheap way to finance the deal.

Vince great information, 

I have also heard that the property you are purchasing must be for your new primary residence? Can it be used for a straight up investment that is going to be rented out right from the get go?

Not straight up investment, but it can be used for up to 4 units. Or a property to be built in the future. Or combined with another members' VA entitlement for more than 4 units. They are actually quite flexible...but paperwork intensive.

We're in the middle of the buying process with a VA mortgage right now, and had to sign a statement for our finance package that we would occupy the property within so many days after closing.

@Dustin Nelson  

No, Both FHA & VA mortgages are for owner occupied properties only. However, you can buy up to a 4 unit bldg., as long as you reside in one of them.

A friend of mine bought 7 owner occupied residences in series one after the other, stayed a year, bought another, moved, rinsed and repeated. Ended up with a 4 unit, a 3 unit, a town house, a condo, a couple SFH and a farm. All legal owner occupied with the lowest down payments and the lowest interest rates.

OK thanks, seems like a great option if you are willing to move around. Now i just need to convince my wife of the endless possibilities...

Originally posted by @Vince Williams :

***THIS IS SOME GOOD INFO I FOUND***

Can I Have 2 VA Loans At One Time? YES!
In some cases you can have two. Veterans and active duty military with a VA Home Loan might be surprised to know that they can qualify to purchase a home with a second VA Loan based on what's called their Second-Tier Entitlement.
While there's plenty to know about the VA Loan for those just looking to use it the first time, there's a lot of information about using two VA Loans simultaneously.
A lot of vets think they can only use their VA Loan once and they're trying to save their VA Loan benefit when they don't have to. The VA does allow for having two VA Loans at the same time, as long as the max entitlement is not exceeded. Also, the borrower must qualify for the second loan and in some cases, may need two years of rental history on the first home to offset the mortgage payment when trying to get qualified income-wise to purchase a second home.
First let’s explain the difference between entitlement and maximum loan amount.
Each borrower using a VA Loan has a $36,000 entitlement that the VA guarantees to the lender in the unfortunate event that a borrower would default on the loan. The VA's formula dictates whether or not all that entitlement is used with the initial loan, and thus, additional entitlement can be available. And even if the entitlement is $0 after the purchase of the first house, then the Veteran or active duty member can still use their second-tier entitlement, but there will be a standard minimum and maximum loan limits on what the borrower can use to buy that second house.
Where does the $36,000 come from? This is 25% of 144,000, the "old" maximum loan amount for VA loans.
The VA now has County maximum loan limits as high as 768,750 in the DC Metro Area. With that loan amount, your 25% guarantee is 192,187.50 in entitlement.
"Second-Tier entitlement is nice because for those people using it, it means they don't have to sell their (first) property right off the bat when obtaining the second VA Loan. However, they still have to qualify for the VA Loan. While Second Tier Entitlement is not widely used because of its complexity and the fact that plenty of lenders are not well versed in calculating it, does not mean that interested borrowers should wave the white flag and look elsewhere for a different home loan.
There are a lot of people that don't know about it or are misinformed, lenders included. But there are those out there, that know about second-tier entitlement and how to calculate it, and are comfortable working with it.
If you're in a VA Loan already and thinking about using your VA Loan again, call a VA Loan Specialists to learn more about your second-tier entitlement.
An Example of calculating second-tier entitlement:
Veteran has used $104,250 of entitlement on a prior loan, which may not be restored because the loan is still active and is now a rental due to orders to transfer. The Veteran is now purchasing a home for $350,000 where the county loan limit is $768,750.
$768,750 (County Loan Limit) X 25% (your VA guaranty) = $192,187.50 Maximum Guaranty
$192,187.50 - $104,250 (entitlement already used for active VA loan) = $87,937.50 Entitlement Available
$87,937.50 X 4 = $351,750 Maximum Loan Amount with 25% Guaranty – Since the proposed purchased price is less than the max loan amount, no down payment would be required.
If the Veteran would like to purchase a home for 400,000 using the same numbers above, they would be required to bring $12,062.50 as a down payment to meet the 25% guaranty.
400,000 x 25% = 100,000 needed entitlement/guaranty – 87,937.50 available = 12,062.50 difference needed by Veteran to meet lender requirement.

For a list of county loan limits, go to:
http://benefits.va.gov/homeloans/documents/docs and click on current county rates.

 Good Job Vince 

Your knowledge of VA lending exceeds most lenders in terms of calculation of the VA entitlement.

Partial entitlements is actually what a lot of loan officers I work with talk about as a "pain to deal with." its because of the 25% calculation. Personally its not that difficult since the remaining entitlement based on the specific county's loan limit divided by .25% shows maximum sales price a veteran can qualify for. If the veteran wants to qualify for a higher sales price the loan amount difference X .25 = down payment required from Veteran.

I like to help veterans use their VA product to acquire equity and cashflow via 4 plexes, its been a great strategy.

@Vince Williams  

Great info! Thanks for the clarification, since we're looking to get our second VA property in the next year. Also, we should meet up some time - we're obviously close in Provo, and my wife's family lives in Midvale.

@David Krulac  

How did you pull of 6 VA loans (at once?)?!

Also, with the friend that owner occupied 7 properties in a row, were those all VA loans? Is the rule just that you can only have 2 at a time, or 2 ever?

The friend did not get any VA loans, but did get multiple FHA (owner occupied) and conventional low down (owner occupied).

The 6 VA loans that I had at one time were all VA repo. At the time the VA would finance VA repo to non-owner occupants are regular VA fixed home rates with 10% down. they do not down that currently.

This is all very helpful information, thanks! My husband is in the Coast Guard and we will likely look to buy a 4-plex with a VA loan once we're transferred again mid 2016.

Originally posted by @Jessica Skupien :

This is all very helpful information, thanks! My husband is in the Coast Guard and we will likely look to buy a 4-plex with a VA loan once we're transferred again mid 2016.

Good luck Jessica,

Always remember when you do start looking for companies to do your VA loan using your Second Tier entitlements, some will tell you it cannot be done. This is something I never accept as fact. And I have found recently that it is just whether or not the Bank or lender you are talking to accepts it or not. This is not necessarily fact for all of them.

Also thank you and your husband for your service for our great nation.

Great info. I'm in the process of refinancing my primary with a VA loan. Property is in a trust and the underwriter said they can still do it.

I own a second home that has a $70K first on it, but I'm thinking of paying it off. Now that I know I can possibly do a 2nd loan, I'll look into that first before I take that much capital off the table.

Thanks!

I haven't looked it up, but my bet is a rate reduction will follow origination guidelines requiring it to be owner occupied. The option wasn't created to increase landlord's cash flow! :)

@Vince Williams  thanks for the insight.  will definitely be sure to do my research first so I know when a bank/lender says they can't, it just means that THEY can't, not that I can't.  :)

@Vince Williams  Thank you very much for this information. I just finished reading though it for the second time. Excellent breakdown. Knowledge is power.

Question though, and this may be better to ask a lender, but how can one use this, finances aside, with the requirement of owner occupancy? 

We are in the process of trying to get into our first few investments, our current place turning it into a rental then picking up a multi and house hacking for a bit.

Thanks again.

Another hypothetical question for the crowd: Could I purchase a home using the VA loan, secure a construction loan to build a new house (ie. hard money lender), and then roll the construction loan into the original VA loan (i.e.. combined both loans into one VA loan)? Thanks.

@Albert Bui , would you happen to know any lenders servicing NY (Rochester/Buffalo) who are investor friendly when it comes to using the VA loan? I recently bought a 4unit. I plan on refinancing using the IRRRL to get a better interest rate and also remove the "1 year occupancy contingency". My problem though is going to find the next multi unit to live in with support from a lender willing to help out. Every lender has there thing. I have 1 that will use rents regardless of time, but says there's no way ill be approved for a second multi unit . I have another lender who thinks my plan is great, but can't use my rents until I have 2 years of rental income, so that hurts me in terms of what I can "afford" based on just my JOB salary. Any help would be great.

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