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How to Get a Second VA Home Loan
By Stephanie Colestock MONEY RESEARCH COLLECTIVE
A VA loan is a home mortgage loan that’s either issued directly through or secured by the Department of Veterans Affairs (VA). These loans offer zero-down home loans to active duty service members, veterans, and surviving spouses, often with better rates and loan terms than they’d find with a conventional mortgage.
If eligible borrowers don’t use up their entire VA loan entitlement, or if they reinstate that retirement by paying off an earlier VA loan, they may be able to use this benefit again to purchase another property. This can be valuable whether you’re set to PCS to a new area and want to buy a home ahead of time, or plan to keep your existing property as a rental when you move.
Here’s a look at whether you can get a second VA home loan and how the VA entitlement process works.
- Can a VA loan be used for a second home?
- How does VA loan entitlement work?
- How can you get a second VA loan?
- How to apply for a second VA home loan
- How to get a second VA home loan FAQs
- Summary of our guide to how to get a second VA home loan
Can a VA loan be used for a second home?
Put simply: yes, you can use a VA loan to purchase a new home. But as you might have already guessed, the details of using this benefit again can be a little less black and white.
As of 2020, there are no longer loan limits on new VA loans for first-time homebuyers or those with a full entitlement. This means that eligible borrowers can purchase a home up to their county’s conforming loan limit (or more in some areas) and the VA will guarantee 25% of their loan for the lender.
This guarantee allows borrowers to buy without a down payment or private mortgage insurance (PMI) and reduce VA loan closing costs and fees. It can also make it easier to qualify for the loan in the first place. For borrowers who want to buy a home beyond their county’s conforming loan limit — or who are buying a home for more than the appraised value — a down payment is often required.
Borrowers who have purchased a home with a VA loan in the past, though, may be bound to VA loan limits according to how much of their VA entitlement is left. In some cases, they can use this remaining entitlement to purchase a second home.
How does VA loan entitlement work?
Eligible VA loan borrowers are offered their benefits in the form of an entitlement. This entitlement is disclosed in a Certificate of Eligibility (COE) letter from the VA, which can be obtained via an online request or through VA loan lenders after you apply for a loan.
This COE will spell out exactly how much of your VA loan entitlement is available, if any. If you’ve never taken out a VA loan and are an eligible veteran, service member, or survivor, you will have a full entitlement. This means that the VA will secure your home mortgage loan for 25% of the total loan amount, up to your area’s conforming loan limit (or in some cases, more), with no purchase limit.
If you’ve taken out a VA loan in the past — even if you’ve paid off that loan or sold the home — you may only have a portion (or none) of your entitlement left. In this case, you could be limited to 25% of the conforming loan limit in your area minus the entitlement you’ve already used.
Depending on the home you plan to buy, your loan amount, and your lender, you may be required to offer a larger down payment to make up the difference and further secure your home mortgage loan.
What happens to entitlement when you have two VA loans?
A residual entitlement can sometimes be used for a second VA loan, as long as your next purchase meets VA loan requirements and the requirements imposed by your mortgage lender. Your remaining entitlement will be used to secure your second loan, up to 25% of the total loan amount (whichever is less).
In most cases, a second loan will exhaust your remaining VA entitlement benefit. However, the benefit can be replenished over time and used again on a future property.
How to calculate VA loan entitlement
The easiest way to calculate how much of your VA loan entitlement remains is to request a Certificate of Eligibility (COE). This letter will tell you whether or not you’re eligible to take out a VA direct or VA-backed home mortgage loan, and how much of your entitlement is available for use.
If your letter states that you have a remaining entitlement of:
- $36,000, you have your full benefit available. This means that the VA guarantees a maximum of $36,000 on a home mortgage loan up to $144,000, or 25% of a home loan above $144,000.
- $0, this means that you have used your VA loan entitlement and do not have any benefits remaining at this time.
- Between $1 and $35,999, this means that you are currently using a portion of your VA loan entitlement, but also have benefits remaining. You may be able to use this remaining entitlement to purchase another home.
How can you get a second VA loan?
Your VA loan entitlement is not a one-time benefit. In fact, there are many different scenarios in which you can use this earned benefit to obtain a second VA loan, even after you’ve used your basic entitlement.
Here are some situations when getting another VA loan is possible.
If your first VA loan is fully paid off
If you use your entitlement to purchase a home with a VA loan and fully pay off that loan as agreed, you may have some or all of your VA loan entitlement remaining.
If you sell the home and pay the VA loan back completely, your VA benefit is automatically restored and you can use the full entitlement to purchase your next property. This does not apply if your home has been foreclosed on or you’ve been forced into a short sale of the property unless the VA is repaid in full for what it paid to your lender to make good on the loan.
If your home is paid off but you decide to keep the property — either as a vacation home or a rental property — you will likely need to request a one-time restoration of your VA loan entitlement in order to have it fully reinstated. This is accomplished with VA Form 26-1880, which can also be used if you pay off your VA loan by refinancing your property with a non-VA mortgage refinance loan.
If your first VA loan isn’t paid off, but is in good standing
If your home was purchased with a VA loan and is still being paid off, or was already paid off but you’ve decided to hold onto the property (but haven’t requested that your benefits be restored), you may still be able to take out a second VA loan. Just expect that you may be subject to a reduced remaining entitlement instead of your full entitlement benefits.
If another veteran assumed your VA loan
You may have the opportunity to sell your home to another veteran or servicemember who is also eligible for a VA loan. In some cases, they might be able to simply assume your VA loan, which can free up your own entitlement.
This is especially beneficial to the buyers, since assuming your old VA loan allows them to also assume your existing interest rate. If mortgage rates have risen since you bought your home, the buyer may save a lot of money over the course of the loan.
The homebuyer must have their own VA entitlement and your lender must approve the assumption of your loan before this is possible.
How to apply for a second VA home loan
Regardless of your VA loan entitlement, you’ll first need to qualify in order to take out a VA loan – regardless of whether it’s your first home or your fifth investment property.
Qualifying for a VA loan is similar to qualifying for any other home loan type: you’ll need to meet your lender’s requirements for credit score/credit history, debt-to-income ratio (DTI), income, and assets. If you only have a partial entitlement left, you may also be required to give your lender a down payment so that the sum of the remaining entitlement and the down payment is equal to or greater than 25% of the purchase price of the property.
Beyond that, here’s how to apply for a second VA home loan.
Complete VA Form 26-1880
VA Form 26-1880 is used to reinstate your full VA entitlement if you’ve sold or paid off your home and the VA has been paid in full. This form is usually submitted by mail to your regional loan center.
Obtain a Certificate of Eligibility (COE)
You’ll then need to obtain a COE, or Certificate of Eligibility, which will tell you whether or not you have VA loan benefits remaining and, if so, how much of your entitlement is left.
To get a COE, you can submit a request:
- Through the eBenefits website
- Through the mail, by sending a Request for a Certificate of Eligibility (VA Form 26-1880) to your regional VA loan center
- Through a lender, who will use the Web LGY platform to certify your benefits
Surviving spouses use VA Form 26-1817
If you’re an unmarried, surviving spouse, your eligibility for VA loan benefits can be obtained by submitting VA Form 26-1817. (In some cases, remarried spouses over the age of 57 may also qualify.)
This form is not used to reinstate previously-used VA loan benefits.
How to get a second VA home loan FAQs
Can you have two VA loans at the same time?
Yes, you can have two VA loans at the same time. You can purchase a second home with a VA loan as long as you have a remaining entitlement and meet your lender's requirements for the purchase. In some cases, this may even mean offering a down payment to your lender on the second VA loan.
How many VA loans can you have?
Technically, there is no limit to how many times you can use your VA loan benefits, as long as your loans have remained in good standing, the VA has been repaid in full (in the case of a foreclosure or short sale), and/or your benefits have been reinstated. Depending on your orders, financial situation, and home history, you could very well use the VA loan program multiple times on multiple properties.
With that said, you can't use VA loans to purchase more than one new property at a time. For instance, you can buy a home at your next duty station while your current home is on the market. Or you can keep a paid-off home as an investment property even if you use your VA benefits to PCS and make a home purchase elsewhere.
In order for a home to be eligible for a VA home loan benefit, you must meet certain credit, occupancy, and income requirements. These loans are intended for a borrower's primary residence, and the property must be occupied by the borrower within 60 days of closing; you can't use a VA loan to purchase a property solely for investment purposes. However, multi-family homes (with up to four units) can also be purchased with a VA loan, as long as the borrower plans to live in one of those units.
Summary of our guide to how to get a second VA home loan
The VA home loan program is one of the most beneficial home-buying options for eligible veterans, active duty service members, reservists, or surviving spouses. It’s not a one-time benefit, either: once the benefit is earned, it can be later reinstated to purchase a property with a second VA home loan, as long as you meet certain requirements.
Whether you’re curious about your eligibility or loan options, need to reinstate a previously-used benefit, or want to know how to refinance a VA loan, you can check out the VA.gov website for more information. You may also want to reach out to your regional loan office or speak with a VA lender in your area to learn more.
Stephanie Colestock is a DC-based personal finance writer with nearly 11 years of freelance writing experience. She covers a wide range of finance-related topics and is currently working toward her CFP®️ certification. Her work appears on sites such as Business Insider, MSN, Fox Business, CNET, Investopedia, and more.