Can You Use a VA Loan More Than Once?

If you’re eligible for a VA Loan, you can use the benefit more than once. This guide explores the specifics of VA loans, how entitlement works, the benefits of using VA loans multiple times and what else you should know about reusing these mortgage products.

Understanding VA Loans

VA loans are designed to help veterans, active-duty service members and eligible surviving spouses achieve homeownership.

What is a VA Loan?

Backed by the U.S. Department of Veterans Affairs (VA), VA loans are mortgages offered by private lenders that come with competitive interest rates and no down payment requirements. Plus, you can avoid private mortgage insurance (PMI), making the loan far more affordable than traditional mortgage options.

Who Qualifies for a VA Loan?

VA loans are accessible to veterans and active-duty service members who meet the following criteria:

• Veterans: Must have served at least 90 consecutive days during wartime or 181 days during peacetime.
• Active Duty Service Members: Must have served at least 90 continuous days.
• National Guard and Reserve Members: Must have at least six years of service or 90 days of active-duty service.
• Surviving Spouses: Must be the spouse of a service member who died in the line of duty or as a result of a service-related disability

Can You Use a VA Loan More Than Once?

Yes, you can use a VA loan more than once. Here’s what to know.

The Concept of a VA Loan Entitlement

A VA loan entitlement is the maximum amount the VA will pay the lender if you default on the loan. It also determines how much you can borrow before a down payment is required.

VA Loan Basic vs. Bonus Entitlement

The basic entitlement amount is $36,000 on VA Loans, up to $144,000. It increases to 25% of the mortgage loan amount exceeding this figure.

Once you sell your home or repay the loan, your entitlement can be restored and used again. Or, if you currently have an outstanding mortgage, you can use the amount left over to purchase another property.

Bonus entitlement applies when you buy a home above the conforming loan limit or if your basic entitlement is currently in use and you want to buy another property.

Are There Any Benefits to Using a VA Loan Multiple Times?

You can benefit financially from using a VA loan several times, but there are also potential drawbacks to be aware of.

Advantages of Reusing VA Loans

• You can avoid a down payment if you have an adequate amount of entitlement remaining.
• You can skip PMI that’s otherwise required on conventional loans with a down payment of less than 20%.
• You can refinance with a VA loan to get better terms or to convert home equity into cash.

Potential Risks and Challenges

• You’ll pay a funding fee that increases each time you reuse the VA loan.
• You must use the home as your primary residence.
• Your remaining entitlement can affect your loan limits.

Some Scenarios for Reusing a VA Loan

If you plan to reuse a VA Loan, there are some ways to make the most of this opportunity.

Selling or Refinancing the Original Property

If you sell your current home, you can restore your entitlement and use it to purchase another property with a VA loan. You must pay your current loan in full to exercise this option.

Refinancing to change your loan terms, get more affordable mortgage payments or convert your equity into cash using a non-VA product could restore entitlement if you request a “one-time restoration of entitlement.”

Ensure your current VA loan is in good standing before attempting either of these options. This will help streamline the process, making qualifying for a new VA loan easier.

Owning Multiple Properties with VA Loans

It is possible to have two VA loans simultaneously under certain conditions. If you have partial entitlement left after buying your first home, you can use it to purchase an additional property, which can be beneficial if you need to relocate but aren’t quite ready to list your current home for sale.

Keep in mind that both properties must be used as primary residences at different times.

For example, if you are reassigned to a new location, you might use the second home as your primary residence.

Another method involves having enough remaining entitlement to cover the new loan. The VA loan limit varies by location, so check the specific limit in your area. If you have remaining entitlement, you can take advantage of VA loans and enjoy the same benefits even if you purchase an additional home.

How Does the VA Loan Entitlement Restoration Process Work?

Restoring your VA loan entitlement allows you to use your VA loan benefits more than once. You could be eligible for full or partial entitlement, depending on your unique circumstances.

Full Entitlement Restoration

You could be eligible for full entitlement restoration if you have paid off your previous VA loan entirely, sold it and no longer own the property or refinanced into a non-VA product.

To start, you must fill out a Request for a Certificate of Eligibility (or VA Form 26-1880). This form will confirm your eligibility and help you reclaim your full entitlement.

Once your request is approved, you can apply for a new VA loan with the same benefits, including no down payments or PMI and competitive interest rates. Remember, to qualify for funding, you must meet all other lender requirements, such as credit and income criteria.

Partial Entitlement Restoration

Partial entitlement restoration occurs when you still have some entitlement tied up in another property, but it’s not enough to fully cover the purchase of another property.

In this case, you can still use a portion of your remaining entitlement to secure a new VA loan.

Calculate your remaining entitlement by subtracting the amount still tied up from your total available entitlement. You will also need to provide your Certificate of Eligibility to your new lender to show the remaining entitlement amount.

How to Restore Your Entitlement

If you need to restore your entitlement, here’s what to do next.

Steps to Full Entitlement Restoration

• Step 1: Repay your existing VA Loan. You’ll need to repay your current VA Loan by selling it or refinancing the balance into a non-VA mortgage product.
• Step 2: Submit the necessary documentation. A Certificate of Eligibility (COE) with a $0 balance is a primary requirement.
• Step 3: Apply for restoration. Reach out to the lender directly to start the process.

Applying for Partial Entitlement Restoration

• Step 1: Calculate your remaining entitlement. Refer to your COE to determine how much entitlement remains.
• Step 2: Meet VA Loan requirements. Confirm your new loan meets VA requirements.
• Step 3: Submit the necessary documentation. Fill out and submit the applicable forms to the VA.

VA Funding Fee on Subsequent Use

You’ll need to pay a funding fee each time you take out a VA Loan. The amount you’ll pay varies by the loan amount, down payment (if applicable), your service history and the number of times you have taken out a VA Loan. You can pay the fee upfront or roll it into the loan.

Are There Any Limits on the Amount You Can Borrow with a Subsequent VA Loan?

It depends on your entitlement.

VA Loan Limits Explained

If you have full entitlement, there are no limits on loans exceeding $144,000, and a down payment isn’t required. That said, limits could apply if you’ve used a portion of your entitlement.

How Loan Limits Affect Reuse of VA Loans

Your available entitlement is lower if you have an active VA Loan. And your borrowing capacity, or the loan amount you can access without a down payment, will also be lower.

Final Thoughts on Reusing VA Loans

You can use a VA Loan more than once without having to make a down payment. Entitlement is key, though, and each lender will check how much you have remaining to determine your borrowing power.

Frequently Asked Questions (FAQs) on Reusing VA Loans