Wraparound mortgage on VA Loan

3 Replies

I have a neighbor with a VA loan that's about to PCS (permanent change stations) if I do a wraparound mortgage will he be able to retain his VA loan entitlement and get another property ? Will the wrap free up the VA Entitlement?

A current or former servicemember has only ONE VA loan benefit. If you wrap it, it is still used and he cannot get another. If he refinances and you wrap, it will free up the benefit.

If you wrap it and he's in a worse position or you default, courts will crucify you.

Not a recommended course of action.

Originally posted by @Ron Lamb :

I have a neighbor with a VA loan that's about to PCS (permanent change stations) if I do a wraparound mortgage will he be able to retain his VA loan entitlement and get another property ? Will the wrap free up the VA Entitlement?

Depends on his benefits and the amounts of the loans. He can use "up to" his benefits. If the second loan keeps him under the limit and he meets the other requirements, he can do a second VA loan without paying off the first VA loan. Most lenders also will recognize a wrap as "off setting income" and allow for the new VA loan without a refinance. The issues are Debt to Income (does he meet the front end and back end DTI requirements) and does the second loan keep him under the limits of his benefits. Talk to a knowledgeable mortgage broker in the new location for local details. The cost of the house he tries to buy will impact the answer.