Whether it’s the need for more rooms, a backyard for the children to play, or extra storage space to store valuable things, ultimately, the hunt for the new “perfect” house begins. However, this process can be costly, as families try to save capital for a traditional down payment. Thankfully, this is where VA loans come in handy. So, if you are wondering how to apply for a VA loan, if you qualify, if you can use a VA loan more than once, or even have two at a time, you are in the right place. We answer all your questions about VA loans.
VA loans allow you to buy a house with limited fees. They offer affordable mortgage and housing options for Active-Duty Service Members, entitled Reservists, eligible National Guard employees, Veterans, and qualifying Surviving Spouses who belong to one or more of these groups and planning to buy a new home soon!
Acronym for Veterans Affairs loan, a VA loan, can help unlock your desired home door. But the big question is, how do you apply for a VA loan, and how many times can you use a VA loan?
You may have used a VA mortgage to buy a house before and wondering if you can apply for another VA loan or if there is a limit on how many times you can benefit from the program.
This article comprehensively explores everything you need to know about VA loans, including but not limited to what exactly it is, how to apply, how to use VA entitlement, and, more importantly, how many times a Veteran can use their VA home loans.
Without further ado, let’s dive right into it.
What Is A VA Loan?
A VA loan is a mortgage loan given by private lenders via a program set up by the United States Department of Veterans Affairs (formerly the Veterans Administration). Due to the VA guarantee, these loans feature home loan benefits like lesser lender risk, limited fees, etc., compared to other traditional loans.
The hallmark features of the VA loans program make homebuying easier for eligible candidates. With VA loans, Active Service Members, their Surviving Partners, and Veterans can buy a house with less or no down payment, no private mortgage insurance, and get a competitive mortgage interest rate.
VA Loan Benefits
The advantages of a VA loan are the same, regardless of your choice of lender. They include:
- No requirement for private mortgage indemnity.
- No deposit consequence if the lender pays off the loan on time.
- No compulsory down payment unless mandated by the lender or if the residence’s purchase price is more than the fixed worth of the property.
- Help is available from the VA to assist borrowers in preventing defaults.
- Closing prices are reduced and may be paid by the seller.
Who’s Eligible to Get A VA Loan?
Eligible Veterans qualify for this loan depending on what time you served and if you were on active duty in the National Guard or the Reserves.
Generally, if you started your service after Aug. 2, 1990, and you were an Active-Duty Service Member, your qualification for a VA loan will involve that one of the following situations applies to you:
- Minimum of 24 months of service nonstop.
- 90 days at least during which you were ordered or called to active duty.
- Less than 90 days if you obtained a service-connected disability discharge.
- Minimum of 90 days if you were liquidated for a hardship, the government convenience, or a force reduction.
- No account of a dishonorable, other-than-honorable, or bad-conduct discharge.
As mentioned earlier in this article, VA loans are home loans offered through banks and mortgage companies but backed by U.S. Veterans Affairs (VA) Department. Consequently, the government and the lenders may have unique eligibility requirements just like any other loan. Ensure you confirm these requirements to be sure you qualify to apply.
Can I Use a VA Loan More Than Once?
Yes! You can use your VA loan benefit unlimitedly throughout your lifetime; so far, you still meet the VA and your lender requirements. Your VA entitlement determines your loan amount. As long as your entitlement remains, you typically have the chance to get another VA loan.
For eligible borrowers who qualify with an approved lender, there’s no limit on the number of times you can use a VA loan benefit in your lifetime.
How Many VA Loans Can I Have At One Time?
In some cases, it is possible to have more than one VA loan at a time. This sometimes happens when a Service Member obtains Permanent Change of Station (PCS) orders, meaning they need to relocate to a new duty station. However, you may have to sell your VA-financed home before you can use a VA loan to purchase another house.
VA Loan Entitlement: What Is It?
The key to using your VA loan two or more times is entitlement. VA loan entitlement is the amount the VA is willing to pay the creditor if the lender defaults on their loan. It’s usually 25% of the loan amount.
Eligible borrowers have two entitlement levels: Basic (or Primary) and Bonus (or Secondary). When Veterans procure a home, they use some or all of their loan entitlement.
Your Certificate of Eligibility (COE) includes an entitlement code that shows your lender how you got your entitlement. Also, it’ll show your Basic Entitlement amount – $36,000. With the VA promising to repay 25%, it means you have access to about $144,000. Typically, this is the maximum amount you can borrow.
However, this doesn’t mean your loan rate has to be $144,000 or below; it can be more, implying that you’ll use your bonus entitlement.
Bonus entitlement begins when your loan is above $144,000. If you have full entitlement, the VA will cover 25% of your loan sum, even if it’s higher than $144,000. If you have reduced entitlement because you’ve already used some of your entitlement, the VA will sum up to 25% of your county’s specified loan limit.
Restoring Full VA Loan Entitlement
Using full entitlement means you’re either a first-time VA loan user or completely paid off a previous VA loan. There’s no restriction on how many times you can use a VA loan benefit, as that $36,000 is restored every time you pay off a VA loan.
If you’ve acquired a VA loan before, the VA can only offer you a one-time full entitlement restoration if you have cleared your VA loan but still possess the building you used the loan to acquire. However, you may have to sell such a building before you can have your entitlement restored fully in the future.
Using Reduced VA Loan Entitlement
Your entitlement amount is said to be reduced if some of your entitlement is stuck in a VA loan that you’re presently paying, if you’ve repaid your loan in full but still have the home you used a previous VA loan to buy, you haven’t applied for entitlement restoration, or if you’ve defaulted on a previous VA loan.
You can still use your reduced or partial entitlement to obtain another VA loan, but how much you can borrow now has limits.
Using a partial entitlement indicates the VA will only accept your loan up to that conforming loan limit and deduct the entitlement you’re using in your present region. With that, you can still acquire more than your entitlement based on your lender’s requirements, but you’ll possibly have a down payment to make up for the difference.
How To Apply for A VA Loan
Below is a step-by-step guide to applying for a VA loan:
Step 1: Choose A VA-Approved Lender
Step 2: Get A Certificate of Eligibility (COE)
Step 3: Pre-Qualify for Your Loan Amount (Optional)
Step 4: Go House Hunting
Step 5: Sign a Purchase Agreement After Finding Your Choice Home
Step 6: Lender Processes Application and Orders VA Appraisal
Step 7: Complete the Closing Process and Move In
However, understand that these steps may not always sequentially occur, as explored above. Nonetheless, they represent the normal application process for obtaining a VA loan.
How To Get a Second VA Loan
- Pay Off Your Current VA Loan First: You can apply for your full entitlement restoration; with that, you’ll be able to use that full entitlement on your subsequent VA loan, but remember that this can only be applied once.
- Delay 2 Years After a Foreclosure on A VA Loan: You’ll miss the entitlement used in the foreclosed residence, but you can use your remaining entitlement for a new VA loan.
- Refinance To a Non-VA Loan: This is helpful if you want to possess a house as your second home or investment property to create your VA loan benefits for a primary residence. However, you’ll need to repay the VA fully to restore your full entitlement.
The bottom line is that once you’re eligible and meet a lender’s requirements, you can use a VA loan as often as possible during your lifetime.
However, some situations may limit the amount you can borrow without paying a down payment. For example, if you’re planning to get another VA loan without paying off the existing one, or if you’ve settled your former VA loan but still retained the home, you might have a partial or reduced entitlement or apply for one-time entitlement restoration.
Overall, the VA home loan benefits you’ve earned for serving your country; therefore, once you are eligible and qualified, you can use this great benefit for housing options and affordable mortgages as often as you want in your lifetime!
CrossCountry Mortgage is a mortgage lender committed to helping our Veterans. If you are interested in learning more about our VA home loan benefits, find a loan officer today.