How Many VA Loans Can You Have? | Second Tier Entitlement | Multiple Loan Options
Last Updated on January 16, 2023 by Bob Filipczak
When you ask “how many VA loans can you have?”, you are actually asking two questions. The VA loan program has a lot of moving parts, and most of them are aimed at helping eligible veterans, military personnel and active-duty service members find and buy a home. If every home buying situation were the same, the VA loan system could build a one-size-fits-all program that delivers the same guarantees to every military professional. But since we are talking about real estate, mortgages, loans, contracts and all the stuff that goes along with the world of real estate, it gets a little more complicated.
If you are asking that question, which is two questions, you may already have a VA loan guarantee. If so, you’ve seen what it can do to the affordability of the home buying process. If you are just beginning the process of investigating VA home loans, the three things you should remember are:
- No down payments
- No private mortgage insurance (PMI)
- Lower interest rates
Those three factors alone should get your attention. They make the VA loan system unique in the real estate market.
How Many VA Loans Can You Have Over Your Lifetime
This is the easier of the two questions because there are fewer moving parts. Simply put, you can access the VA Loan benefits, if you are eligible, throughout your lifetime. It’s not a one-and-done mortgage. Once you go from your first home to your next home, and you pay off your first mortgage, you can reapply for a new VA loan and get all the benefits again.
In addition to the typical VA loan guarantee, the U.S. Department of Veterans Affairs offers two refinance options when you’ve been in your home for a few years. These refinancing options can help you improve your finances. Keep these in mind as you are looking over your VA Loan options.
The acronym is short for the VA Interest Rate Reduction Refinance Loan. It is a loan that replaces your current mortgage with another VA-insured mortgage, but this one has a lower interest rate. Having a lower interest rate has short-term and long-term benefits including a lower monthly payment and lower overall debt over the life of the mortgage. It’s important to remember that the IRRRL VA loan is only available to the current VA loan holders.
VA Cash-Out Refinance
This is what it sounds like – a way to get cash out of the equity you’ve built in your home. You can use the cash for renovations, fixes, emergency medical bills, education and more. New rules allow you to tap into 100% of your home’s appraised value. Another benefit of this loan refinance is you don’t have to already have a VA loan. You can have a conventional mortgage and switch into the VA system if you qualify. The financial benefits of being “in the VA system” include no down payment, lower interest rates and no private mortgage insurance (from $100-$300 a month).
There are other loans and loan guarantees from the VA, but these two refinance options can help you out a great deal.
How Many VA Loans Can You Have At the same Time
This is the more complicated question: Can I have two VA loan guarantees at the same time? As you might guess, the simple answer is “it depends.” So let’s examine the mechanics of the VA loan limits so you can figure out how much you can borrow with your VA loan benefit.
The first thing to understand is that the VA loan program simply insures and guarantees your loan. Private VA lenders actually deliver the money and become your mortgage company. The insurance the Veteran’s Administration puts on your loan reduces the risk for the private lender and gives them confidence when giving you the mortgage.
The VA will guarantee 25% of the loan amount, and the basic coverage (they call this your entitlement) is $36,000. With a little math, you can see that the guarantee will cover a $144,000 mortgage loan. If that seems low, it is. Most single family homes in the U.S. cost quite a bit more than that, whereas the median price for an existing home in the United States is $379,100 when this post was published.
The VA knew it needed to change the basic entitlement to keep up with the market. It made some adjustments to its policies and regulations and came up with a secondary entitlement that covered home loans up to the current maximum amount of $647,000.
COE and Entitlement
The VA Certificate of Eligibility is the one of the first things you will encounter when you start investigating the VA loan process. The COE is exactly what it sounds like: it verifies to the VA loan processors that you are, in fact, eligible for the program.
The COE, once you get it, also lists your VA loan entitlement, meaning it lists how much of a loan (or loans) they will insure. For example, if you have a VA entitlement for the full $647,000, your mortgage loan can’t be over that amount. If you are looking to get two VA loans, the two added together can’t exceed your entitlement. In this case, you could have a first VA loan for $300,000 and then a second VA loan for $346,000.
This doesn’t happen a lot, but there are cases where this makes sense. If you’re an active duty service member and moving to a new duty station, you might have trouble selling your old place before buying a second home at the new base. In this case, your two VA guaranteed loans need to fall below your entitlement.
In this example, you might also want to keep the old house as a rental property. That’s possible too. You can use the first house as an investment property and the new house as your primary residence. In this case, the new house and loan must be your primary residence.
With multiple loans, figuring out your entitlement takes some effort. Restoring your entitlement when you pay off your mortgage is an important step that you need to keep top of mind. Making sure the VA knows your original VA loan is paid off will let you use your full entitlement on your next home purchase.
Restoring your entitlement means changing your COE, and there’s a two-page tutorial that explains how to do that, as well as a downloadable form that you will need to access.
One of the advantages of the VA Loan is it is assumable. That means that another buyer can take over paying your mortgage without getting a new mortgage on their own (there are some financial hoops on assumable mortgages, however).
Here’s where it gets tricky. If your mortgage is assumed by a fellow veteran or active-duty service member who also has proven themselves eligible for a VA loan guarantee, good. Then you can restore your full entitlement. If, however, the person assuming the mortgage is not part of the VA program – not a veteran or military person – then your entitlement is not restored. They may be responsible for the mortgage, but for the VA your entitlement will continue to be a reduced amount.
VA Loan Funding Fee
While there are a lot of ways to save money through the VA loan process, there is one cost to look out for. The VA Funding Fee is something you pay each time you get your loan guaranteed or insured by the VA system. The one-time fee helps fund the system, but it’s not a small amount. For the first time you use it, it’s only 2.3% of the total loan. The second time you use it, it is 3.6%, and that’s what it will be for the second loan if you have multiple VA loan guarantees at the same time. You can, however, fold the fee into the loan and pay it off over time (as long as you don’t push the total over your entitlement). Long story short: if you get two VA loans, you pay the funding fee twice.
There are some exceptions, that is, veterans who do not have to pay the funding fee.
- Veterans who receive compensation for a service-related disability
- Veterans eligible for service-connected disability pay but receiving retirement or active duty pay instead
- Surviving spouses of a veteran who died in service or from a service-related disability.
- Active-duty service members who have been awarded the Purple Heart.
- Veterans who have a memorandum rating saying you are eligible for compensation based on pre-discharge claim.
Homes for Heroes: Sorting Through Your Options
When it comes to VA loan guarantees, trying to sort through all the mortgage documents tied up with your home purchase, sale, or refinance is not really a DIY project. You’ll want an expert to help you navigate through the sea of paper. That’s where we come in. Homes for Heroes connects you to the experts you need to find a home AND navigate the world of mortgages.
When you sign up with us, we connect you with our local real estate and mortgage specialist agent who can prepare you for your house hunt, walk you through your VA loan options and help you get qualified for the benefit.
When you complete the process and close on the house, we give you a Hero Rewards check to help you start your next chapter. The average check received by our heroes is $3,000, which you can use for repairs, renovations, furniture, appliances or whatever you choose. It’s our way to thank you for your service to the community and our country.