Good morning BP. I am strongly considering working with a potential client who has a retail property they need to sell fast due to a change of location because of their job. The client would like to purchase another property where they are moving to using their VA eligibility. I want to do a lease option on the property they are selling. My question is that if we lock the property in a lease option would they be able to use their VA eligibility to purchase another property during that lease. Thoughts?
Their VA eligibility would have nothing to do with your purchase, other than it affecting their debt to income. The lender will still want to see reserves on their part, and likely will not count the rent received, or if so, only count a pro-rated portion, as income towards the buyers new purchase since it will be such a new source of income.
No they cannot. The VA allows you to use it on on lay one house at a time per your purchase. I you sold the va house and paid off the loan then you would be in possession of a greasy VA certificate.
Sam is right. You can only use the VA loan on one home at a time, so the lease option buyer will need to exercise the option & purchase before they will be able to use their VA loan again.
Yup, one VA loan in your name at a time.
Every situation is a little bit different. Your Veteran should contact his Veteran's Affairs Home Loan Counselors or the VA Specialist at his bank for more details on his particular situation.
As a vet myself who has used the VA Home Loan a few times, let me tell you that generally speaking, it is correct that a borrower can only have (1) VA loan out at a time. Kind of.....
It's actually that you can only have one amount of "Entitlement" that the VA will "Guarantee" for you, at a time.
The VA "guarantees" your loan to your lender so that the lender is more confident in offering you a loan and tend to provide more favorable loan terms. The loan is supposed to be for owner occupied properties. The VA doe not actually provide any source of funds. Each veteran has an "entitlement" amount and that amount can vary a bit, mostly because the amount is based on each county in the U.S., if the vet was active duty/guard/reserve, their period of service, any disability, etc.. The loans can be assignable to other eligible borrowers. Anyway...
Depending on the circumstance the borrower may technically be able to have (2) or in theory more, "VA loans" out at once. I have personally done that and had 2 large loans at once. The veteran needs to check on his "Entitlement Eligibility." It's more a matter of remaining entitlement, LTV ratios, down payments, etc... . When the veteran repays the VA loan, their entitlement is "Restored" and can be used again. Almost like an extension of credit in which, as the borrower pays down the amount loaned to him/her, that amount paid becomes available for use again. This is over simplified, but just to highlight the point. The VA loan is not revolving though, and is obtained pursuant to evaluation of an application each time.
More often than not, it will be the case where the veteran can only have one VA loan at a time until he/she repays that loan, has the entitlement restored, and then reapplies again for another loan.
For more details check out all the links at:
I was recently qualified to buy another owner-occupied house, using the remainder of my VA entitlement.
We are currently living in the house with the first use of my VA entitlement, and are looking to move into another house, using the remainder of VA entitlement. We told the lender we would rent out the current primary, not sell. The official certificate of entitlement or COE has a place to enter "Prior loans charged to entitlement" and shows a basic entitlement of $36,000. It also says, "Additional entitlement is available for most loans in excess of $144,000. In such cases, the entitlement amount is 25% of the VA loan limit for the county where the property is located."
The seller can use it again, without fully paying off the first.
Thank you all for the advice. It is all very useful. This information will prove to be very useful in my business model. There is a high occurrence of people who move to this area and purchase homes, only to receive a transfer of employment shortly after; a majority of those people are military, hence a preponderance of VA loans.
Again, thanks for all of the advice.
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