The Department of Veterans Affairs sets no limit on how many VA loans you can have in your lifetime. Although, the amount of money that you can borrow by not making a down payment, will be based on the VA entitlement you have already used.
VA entitlement is the amount of money the VA will guarantee on a VA loan. The VA guarantee protects the lenders like Security America Mortgage against losses if you default on your VA loan.
Your earned entitlement is based on your service history and is confirmed with your Certificate of Eligibility and DD214.
If you served 20 years of active duty, you have the entitlement and you can borrow up to the VA entitlement limit without a down payment.
After you have used some of your entitlement, you will have a reduced entitlement and will need to make a down payment on a VA loan. If you have to make any down payment it will depend on the entitlement you have used. Don’t worry, many Veterans use their entitlement many times and never have a down payment.
Factor To Getting Loans
There are many factors at play here. For example, if you change homes over the years and never sell the homes and have a VA loan on them, you’ll have reduced entitlement. Whereas, if you sell the home, you’ll have entitlement restored.
You can only have one primary residence at a time so you can’t have 2 VA loans at the same time and call both homes your primary residence. There is nothing illegal about moving to a different state and renting out your current home that has a VA loan and then getting another VA loan on a new primary residence elsewhere. There are exceptions that could cause issues in this case. If you are moving into the same neighborhood for the same size home and price this could be construed as foul play.
Second-tier entitlement is a reduced amount of entitlement that you can use to buy a home after you have used up your first-tier entitlement. To be eligible for second-tier entitlement, it’s necessary to have served at least 20 years on active duty and have a good credit score.
How Many VA Loans Can I Have at Once?
You can have as many VA home loans as you want at one time, as long as you have the leftover entitlement to support the loans. Your leftover entitlement is the amount of money that the VA will ensure on your loan. You can find out how much outstanding entitlement you have by contacting the VA.
When you apply for a VA home loan, the lender will calculate the ratio of debt to income (DTI) and your credit score. Your DTI is the percentile figure of your income per month that goes towards paying off your debts. Your credit score is a measure of your creditworthiness. The lender will use these factors to determine how much you can afford to borrow.
It is also important to note that there are some restrictions on how many times you can use a VA entitlement. For example, you cannot use a VA home loan to purchase a second home or a rental property. You can only use a VA loan to purchase a home that you plan to live in as your primary residence.
If you are considering using multiple VA entitlements to purchase a home, it is significant to speak with a VA-approved lender to understand the requirements and restrictions.
What is Bonus Entitlement?
Bonus entitlement aka additional entitlement or tier 2nd entitlement is a type of VA loan that enables Veterans to borrow more than the usual $36,000 entitlement. Bonus entitlement is for veterans who have served a minimum of 20 years on active duty and have a good credit score.
The amount of bonus entitlement that a veteran is eligible for depends on the veteran’s history of service and the home’s purchase price. For example, a Vet who served 20 years of active duty that is buying a home that costs $400,000 could be eligible for $16,000 of bonus entitlement. This enables the veteran to finance up to $56,000 without a down payment.
Bringing Back The VA Entitlement
Here we discuss ways to bring back the VA entitlement:
- Selling the home you bought with a VA entitlement and paying it off is the most common way to restore your VA entitlement benefits. Upon selling the home and paying off the loan, you will get a Certificate of Eligibility (COE) with your full VA loan program entitlement restored.
- Get your VA entitlement assumed by another Veteran who can qualify that will take over your payments.
- Apply for a one-time restoration of entitlement. Veterans Affairs allows Vets to apply for a one-time restoration of entitlement if they have repaid their VA loan in full but have not sold the entire property. This is a solid option for Veterans who want to keep their current home as a rental property and purchase another home with a VA entitlement as a primary residence. However, it is quite significant to note that you can only apply for this single time.
To apply for restoration of entitlement, you will need to submit a VA Form 26-1880 to the VA. This form can be found on VA.gov. You will also need to provide documentation that demonstrates that you have met the requirements for restoration of entitlement. This documentation may include a copy of your DD-214, a copy of the deed to the property, and proof that the loan has been paid off.
The VA will review your application and make a decision within 30 days. If your application is approved, you will receive a new COE with your complete entitlement restored. Keep in mind when restoring your VA loan entitlement that the VA does not charge a fee to restore entitlement, and you can only restore entitlement once every 2 years. If you have any questions about restoring entitlement, you can contact the VA at 1-800-827-0611 or ask a Loan Officer at Security America Mortgage 1 855 GOVANOW.