Military Members: Yes, You Can Use Your VA Loan More Than Once. Here’s How.

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If you’ve ever served in the military, you may be eligible for a VA loan. This mortgage option comes with a host of benefits, including 100 percent financing, no private mortgage insurance and flexible credit and underwriting standards. It also comes with another great benefit: You can use it more than once.

If you use your VA loan and then sell the home or refinance it into another loan product, you can request a restoration of your entitlement. The VA normally receives a notification a loan has been paid, but you may need to provide documentation, such as a satisfaction of mortgage from the county clerk if your entitlement isn’t restored automatically. It is also possible to request a one-time restoration of entitlement if you still own the home but the loan has been paid in full.

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Know Your Remaining Entitlement

If you would like to pursue the option of having multiple VA loans out concurrently, you will need to be aware of your remaining entitlement. The easiest way to obtain the exact amount of remaining entitlement is by pulling your updated certificate of eligibility. Many lenders can obtain this for you, or you can request it yourself online or by mail.

Related: VA Loan: The Real Estate Investor’s Guide to Eligibility & Funding

Now a few calculations. If you are eligible for the VA loan, you will obtain a mortgage through a lender, and then the VA will guaranty a portion of that loan. The VA’s guaranty is equal to the lesser of 25 percent of the loan amount or 25 percent of the county loan limit. In most areas, the county loan limit is set at $417,000, but some counties with higher costs of living have higher loan limits.

If a buyer wishes to purchase a home above the county loan limit or above their available entitlement, their lender will likely require a down payment. The VA offers guaranty calculation examples for illustration purposes. Examples 4 and 5 show the calculations for situations where a down payment may be required.

Factors Your Lender Will Consider

Factors other than your remaining entitlement your lender will consider include:

Intent to Occupy

Regardless of whether this is your first VA purchase or your fourth, you must have intent to occupy the new home as your primary residence within a reasonable time (typically 60 days) after you purchase. If you are looking at a multi-unit property, you need to plan on occupying one of the units. The VA doesn’t have a set period of time you must then remain in the home, but the lender likely will.

Often the mortgage deed of trust will outline the period of time you are expected to occupy the home. Frequently this is set at 12 months. But there are certain circumstances where this requirement is waived. You’ll want to talk with your lender about circumstances that would allow a shorter occupancy. One common example of this may occur when an active duty service member receives orders for a new duty station.

multiunit-evaluation

Circumstances Surrounding Subsequent Home Purchase

The purpose of the VA loan is to assist veterans in purchasing a primary residence. This is why you can’t typically purchase a vacation home, working farm or other income-producing properties, with the exception of a multi-unit property in which you intend to occupy one of the units.

If you plan on keeping your first property and using your all or some of your remaining entitlement on a second home, your lender will keep a close eye on your debt-to-income ratio and your plans for the first home. They’ll consider cash reserves, whether you can carry two mortgages or if you have a rental agreement in place for the first home.

Related: VA Loans: What Is “Reasonable and Customary”?

If you are converting the first home into a rental from your primary residence, your lender may want to see a 12-month rental agreement and a deposit check before offsetting the mortgage payment. If it’s already a rental, they’ll likely want you to have a two-year history of property management before you can use the rental payments as income.

If you are looking to use your VA loan again, it’s important to work with a lender with a thorough understanding of the entire VA loan process. They can run your entitlement calculations and guide you through any unique income situations you may face if you currently have or are converting a previous home into an investment property.

Investors: If you have any experience with the VA loan process, is there anything you’d add? 

Let me know with a comment!

About Author

Samantha Reeves

Samantha Reeves is a real estate agent and the senior real estate and homebuying expert at Veterans United Home Loans , one of the nation’s leading VA lenders. As a former loan officer, Samantha has insider experience dealing with the VA mortgage, from initial application and contracts to loan funding. Nearly 300,000 people follow her Real Estate Agents - Veteran Friendly community on Facebook.

34 Comments

  1. John Underwood

    Samantha,
    You keep mentioning “remaining entitlement”. The VA Guarantee is the same no matter how many time you use it. I have used mine once and now have a VA letter in my files that states I can use my guarantee again should I wish to. I shopped around and found a better deal than using the VA loan through Navy Federal Credit Union at the time. You are correct in that your previous VA loan must be paid off before you can get another VA Guaranteed loan. Every subsequent time you use this there are more points (or something similar) to you have to pay. They still will guarantee up to the the full amount each time as long as you qualify.

    • Samantha Reeves

      Hi John,
      In some situations, like if you purchase a home with your VA benefit and then wish to purchase a second home (while keeping the first), you will not have your full entitlement remaining. It is possible to have more than one VA loan out at the same time. Take a look at the calculation examples I provided from the VA. They provide a good illustration of different circumstances where you may not have full entitlement and how to calculate whether a down payment would be required on the subsequent purchase.
      Thanks for writing and thank you for your service,
      Samantha

    • Brenda Harris

      Dear Samantha,
      Thanks for being such a valuable resource. I’m a veteran (regular) and have found a 4-plex (in CA near my home) that I would love to be my first rental property. I do have to find a way to purchase it without cash (part time teacher), and a credit score right at 600. I pulled out my COE and saw that Wells Fargo has certified me for $36,000 (Basic entitlement) Now, I’m confused. The 4-plex purchase price is $569,000 so I thought $417,000 was the “magic amount” and that I would have to put down 25% of the amount over $417,000. What did I miss?

      • Samantha Reeves

        Hi Brenda,
        Thank you for your service and thanks for writing. It sounds like you have full entitlement. Eligible veterans typically have $36,000 in primary entitlement and $68,250 in secondary entitlement. Add these together and you get $104,250 which is equal to 25% of $417K. If you see $36K on your COE, it’s likely you have your full entitlement available, meaning the VA would guarantee a home up to the county loan limit with out requiring you to put money down, assuming you qualify and meet the lender’s qualifications.
        I have a few comments/questions though about your situation.
        First, you stated you wanted to purchase a 4-plex near your home as a rental property. If you want to use your VA loan, you would need to intend on occupying one of the four units as your primary residence. If you are looking to just purchase a strictly rental property, VA isn’t the way to go.
        Second, The VA doesn’t have a minimum credit score requirement, but the lenders who make the loans do. In most cases you will see a minimum credit score of 620, though that can vary from lender to lender. Have you talked with a lender to see if your income and credit situation is in a place where you can qualify?
        Third, I’m a little confused by your last question. If the 4-plex price is higher than the county loan limit, you will have to put down 25% of the amount over the loan limit. In most areas the loan limit is $417K, but it can be higher in certain high cost areas. You mentioned you are in CA, so I’d suggest checking the county loan limit for your area to see what it is. Here’s the link: http://www.benefits.va.gov/homeloans/purchaseco_loan_limits.asp
        Let me know if you have more questions Brenda, I know some of the calculations can get confusing.

  2. Mary lou L.

    This article is very timely! As I am now going through the process of using my VA Loan on a 2 unit property.

    I also have a rental property, It was owner occupied purchased with a VA loan and it has been refinanced into a conventional. My certificate says paid in full/No restoration Entitlement charged is 20,900. My basic entitlement is 15,100. How do I get that restored, do I have to do it or can the lender do this?

    Also, what are the cash reserves on existing rental properties where I will be using the income towards the loan? Is it 3 months of PITI or 6 months PITI. The 2 unit I will be moving into has no requirement for cash reserves on the second unit.

    Thank you again for laying out all the info with links! I tried to find my COE at another place and kept coming up empty!

  3. Samantha Reeves

    Hi Mary,
    Thanks for writing. You can get in touch with the VA and provide them the HUD1 from the refinance and see if they will restore your entitlement. I’d suggest starting by calling your regional loan center: http://www.benefits.va.gov/HOMELOANS/contact_rlc_info.asp

    Chapter 4 of the VA Lender’s handbook outlines the VAs requirements, but lenders may have additional overlays as well. If I understand correctly you are asking about a rental property you already own that isn’t secured by a VA loan. Here’s what the handbook says about PITI in that situation:

    Verification: Rental of Other Property Not Securing the VA Loan
    Obtain the following:
    • documentation of cash reserves totaling at least 3 months mortgage payments (principal, interest, taxes, and insurance – PITI), and
    • individual income tax returns, signed and dated, plus all applicable schedules for the previous 2 years, which show rental income generated by the property.

    and here’s the link: http://www.benefits.va.gov/warms/pam26_7.asp

    Hope this helps! Thank you for your service.
    Samantha

  4. Charles Williams

    @samantha
    Good article about the benefits of VA loans. I’m in the approval process for my 2nd VA loan and can share some nuances/clarifications about the program.

    @John underwood
    Remaining entitlement means how much of a mortgage you’ll qualify for if you still have another open VA loan. As Samantha stated, the maximum loan value in most counties is $417,000. If I don’t currently have another active VA loan, I can qualify for a $417,000 house (more if I put some down). However, let’s say If I bought a $100,000 house with VA guarantee 10 years ago and still own it as a rental, my current qualified loan amount (entitlement) will be reduced by a relevant amount, although not $-for-$. So now you may only qualify for a $280,000 loan. You can google the formula they use, kinda complicated but useful to backup the mortgage officer.

    The VA funding fee, which can be rolled in and amortized over the loan, does increase every time you get a new loan. However, if you’re a disabled vet, the fee may be waived. So even though you may find a slightly better deal via other avenues, the VA loan certainly reduces up front out of pocket costs.

    You may also qualify sooner if you have a negative financial event (ie short sale) than FHA or conventional.

  5. Mary lou L.

    OK, so upon reading the pamphlet I need at least 6 months PITI on the two unit I am going to purchase with the VA loan and occupy
    AND
    3 months of PITI for the other rental that is not on a VA loan?

    Is that correct?

    Thank you so very much!

      • Mary lou L.

        I am in the process of restoring my eligibility (My Va Certificate says Paid in Full/No restoration)

        I refinanced the home in 2004, I did not do a cash out it was an interest rate reduction.

        I did a cash out in Dec of 2015.

        I have the VA 26-1880 and was wondering which box to check.
        11A. One time Restoration Loan
        12A Cash out
        13A. IRRRL (done in 2004)

        Also what does it mean under 11A, “Once you have used your one-time restoration, you must sell all homes before any other entitlement can be restored.”

        Thank you so much!

        • Samantha Reeves

          Hi Mary,
          I’d call your regional loan center and have them walk you through the form as it sounds like you’ve taken several actions on the property and I’m not really clear on the status of the home. Do you still own the property and what type of loan do you have on it now? The RLC will be able to walk you through the form and help you determine the best box to check.
          In response to your question on 11A – there are certain situations where you can only request restoration once. They are outlined here: http://benefits.va.gov/homeloans/purchaseco_eligibility.asp and states: “The entitlement may also be restored one time only if the Veteran has repaid the prior VA loan in full, but has not disposed of the property purchased with the prior VA loan.”
          Hope that helps.
          Samantha

  6. Richard G.

    Hello,

    A very good and timely BP article, but I think the Q&A are better — I used my VA last year May and am counting the days to May 2016 to possibly use it again. I called my Lender to verify and is definitely a possibility– said all the information that was already stated here ie. 417k cap and entitlement benefits, ect. Just debating if I should move in with a family member for xx months to show rental income on the 1st VA home before actually applying for the 2nd VA home. Not really trying to wait a year and show the rental income on any tax return? Just wondering — thanks!

    • Samantha Reeves

      Hi Richard,
      Thanks for writing. I’d talk this over with your lender. If you move out now and convert the property into a rental you could run into an issue if you plan on purchasing in the next 12 months because they may want to see a rental contract extending 12 months out from close on a primary converting to a rental. If you move out a few months before, that could result in a rental contract that doesn’t extend 12 months and then you’d need to look at the qualifications for a strictly rental property. So I’d just talk it over with your lender and decide what the best option is for your specific situation.
      Samantha

      • Richard G.

        Hi Samantha,
        Thanks for your prompt response, not sure if it really maters but is it advisable to go back to my original lender from my 1st VA loan for my 2nd potential VA loan OR should I just go to another lender? Wondering if either or would make it an easier process for all parties involved. Thanks –

  7. Roberto Escapita Jr

    Wow. Awesome article, EXCELLENT q&a! I too, have va loan at my disposal and just familiarizing myself before I pull the trigger on my 1st deal. I like the idea of a multi-unit (4-unit) and probably would like to hire property management co., and would also consider a partnership to guide me through the process; splitting profits fair & accordingly.
    Thank you everyone on here. Best ten minutes invested and wish y’all the very best.
    VR,
    Roberto Escapita Jr.

  8. Christopher Niblick

    This is a great article about a subject that is very poorly explained by the VA or your service’s benefits reps.

    One thing that I was told (which may be incorrect) was that you could only have multiple VA Loan properties in the same geographic area. I can’t remember if the restriction was to a state or county. In my case, my ceiling was $500k for my county, but my second property put me ~$50k over (30k after down payment), requiring a buy down. The buy down was 25% of the $30k above the threshold (so ~$7.5k). Conveniently, this buy down also counts towards the overall down payment for the property to reduce the VA Service Fee from 3.3% to 1.5% (which is a completely sunk cost). This ended up convincing me to put 5% down instead of $0, as the money that would have been lost to the Service Fee was translated into equity.
    Math:
    Purchase: $352k. -> Down Payment @ 5% = $17.6k
    VA Eligibility: ~$300k -> Buy Down @ $30k = $7.5k
    VA Service Fee @3.3%: $11.6k. –> $0 Down + $11.6k in VA Fee + $7.5k Buy Down = $19.1k cost at close, w/ $7.5k to equity.
    VA Service Fee @1.5%: $5.3k. –> $7.5k Buy Down + $11.1k (5% Down Payment) + $5.3k Service Fee = $23.9k cost at close, w/ $17.6k equity.

    • Samantha Reeves

      Hi Christopher,
      You can have homes in multiple areas/states. This is beneficial for active duty service members who purchase in State A then receive PCS orders to State B.
      That’s great that you were able to purchase two homes using your benefit. Thanks for sharing your math too, it sounds like you did the research you needed to, in order to make a sound financial decision regarding your down payment and funding fee.

  9. Kris Spencer

    Two questions here. If you buy or refi with a VA loan and theres funding fees, then you are granted disability afterwards, can you have your funding fees retroactively refunded? Also, if you have a $417,000 loan limit, and you buy a $217,000 primary residence, can you use the remaining $200k to purchase a second, non owner occupied home?

    • Christopher Niblick

      I’m pretty sure that the VA will only support a loan for a primary residence. However, I think you can move from that residence after a year and use the remainder of your eligibility on another property.

      On your first question, if you were not disabled at the time of the note, I doubt that they will consider it retroactively. If your case was awaiting adjudication at the time, you might have a chance.

    • Samantha Reeves

      Hi Kris,
      If you had the claim pending at the time of your home purchase and then were awarded disability after closing it may be possible to get that fee refunded. I’d suggest calling your VA regional loan center to talk with them about your situation and see if your specifics make you eligible for the refund. Here’s a link to the phone numbers for each VA RLC: http://www.benefits.va.gov/HOMELOANS/contact_rlc_info.asp

      For your second question – you can’t purchase a purely investment property with the VA loan. Each time you use the loan, you have to have the intent on occupying the home as your primary residence.

      Thanks for writing!

  10. Darrell D.

    Excellent Article Samantha.

    I currently have 5 properties and I got my start using VA loans. My first house was purchased with a VA loan but I refinanced it after a divorce to a conventional loan. This increased my entitlement back to the maximum value.

    Later I purchased a small house after my move with the VA program. I lived in it for two years and purchased a duplex with the VA loan in the same area. NOTE… The VA will allow you to use VA loans in the same area for one upgrade per area. You must justify what the “upgrade” is. Upon moving into our duplex, we received orders for another military assignment which we didn’t expect. However this allowed us to purchase again in the new area, within a year of previous purchase. So I now have three VA loans.

    Knowing they will allow you to “upgrade” in the same area, you can use the VA program strategically to grow an empire. If done correctly, you could purchase multifamily units for all purchases. It’s always best to live within your means on your first purchase, then upgrade and watch the money roll in. 🙂

    I’m not able to use my VA entitlement now because I reached the maximum for my area… but I don’t really need it. We have our eyes set on a 20-unit building using our equity.

    Good Luck,
    Darrell

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