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How Many Times Can You Use a VA Loan?
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Military borrowers have an affordable path to homeownership with a loan backed by the U.S. Department of Veterans Affairs (VA). You can use a VA loan multiple times as long as you meet the VA’s eligibility requirements and receive a new VA loan entitlement. It’s important to work with a mortgage lender who understands how VA benefits work so the process runs smoothly.
How many times can you use VA loan benefits?
VA loans aren’t a one-time benefit; they can be used over and over again. You can even have multiple VA loans at the same time. The key is ensuring you meet eligibility requirements to reuse your benefits and receive a new VA loan entitlement.
Since its inception in 1944, the VA loan program has been guaranteeing mortgages for active-duty service members, veterans and eligible spouses who may not qualify for a conventional loan. Two key benefits of VA loans: no down payment or private mortgage insurance requirements.
How does the VA entitlement work?
The basic entitlement available to a VA borrower is $36,000, but this number doesn’t refer to the maximum loan amount an eligible applicant can borrow. Lenders will generally lend up to four times the veteran’s available entitlement without a down payment, assuming the borrower meets other income and credit requirements. This means all eligible borrowers who have not previously used their entitlement can get a home loan of up to $144,000.
In many areas of the country, $144,000 is likely not enough to buy a home. To account for this, the VA provides a bonus entitlement. This additional benefit is worth 25% of the home loan amount.
For example, let’s say Jonathan is a Petty Officer 2nd Class in the U.S. Navy and has met the service requirements to be eligible for a VA loan. Jonathan hasn’t yet used his available entitlement and needs a $200,000 loan for the home he wants to purchase. Because his entitlement is limited to 25% of the loan amount, the VA will guarantee $50,000, which is 25% of the $200,000 loan amount.
How to restore your VA loan eligibility
How many times you can use VA loan benefits depends on what you plan to do with your current home. Here are two ways to get a second VA loan:
1. Sell your existing home
If you sell your existing home before buying another, proceeds from the sale may be enough to pay off the existing mortgage balance in full — then you can regain your full entitlement. You may not have to obtain a restoration of entitlement if you have enough remaining to cover the new loan for which you’re applying, however.
Returning to the example above, if Jonathan sells his home, pays off the existing mortgage and wants to access his full entitlement for a new loan, he’d want to restore his eligibility and get a new Certificate of Eligibility (COE) showing none of his benefits are currently in use. However, if the new home he plans on purchasing is only $250,000 and his county loan limit is $510,400, he has a remaining entitlement of $77,600 and could simply rely on it for his home purchase.
2. Pay off your existing VA loan
What if Jonathan doesn’t want to sell his existing home and instead, wants to turn it into an investment property and buy a house in a new area? It may be possible for him to have two outstanding VA loans at the same time. If Jonathan wants to buy a new home elsewhere but keep and rent out his existing house, he can use his remaining benefits. If he wants to buy a property that is priced higher than the $250,000 home mentioned above, he can still use his VA entitlement, but he’d need to make a down payment for the amount that exceeds the local loan limit.
To access benefits for a new VA loan, you’ll need to restore your eligibility by completing VA Form 26-1880 (or VA Form 26-1817 for surviving spouses) — that’s the same form used to obtain a COE. Once you have the COE in hand, the amount of basic entitlement and the amount currently tied up in your previous loan will be displayed near the center of the online form.
Keep in mind that you may have to pay a higher VA funding fee when you reuse your entitlement. Funding fees are a percentage of the VA loan amount, and they vary based on the borrower’s military status, the down payment amount and whether the benefits have been used before.