How Many VA Loans Can You Have at One Time?
Real estate is a fantastic investment for yourself and your family for generations. If you're dreaming of owning multiple homes or upgrading to a new abode while using VA loans, you might wonder, "How many VA loans can I have at one time?"
The Basics of VA Loans
VA loans were created as a gesture of gratitude for a service-member’s service to the nation. They are an exceptional benefit for eligible service-members, veterans, and their families.
The General Rule: Yes, but Entitlement Matters
First things first, it’s possible to have more than one VA loan at the same time. The most important factor to consider is how much entitlement has already been charged, and how much remains. There are scenarios where you might be eligible for additional VA loans without fully paying off an existing VA loan.
- Using Your Entitlement Wisely: VA loans work based on a system of entitlement. You're entitled to a certain amount of the loan that the VA guarantees. When nothing is charged against your entitlement, meaning you don’t have any VA loans yet, there is essentially no limit to how much you can borrow as long as you qualify for the payment.
- Remaining Entitlement, A Gateway to Multiple VA Loans: This is where things get interesting. If you still have your first VA loan and are looking to purchase a new home, you might be eligible for a second VA loan by utilizing any remaining entitlement.
However, it's essential to understand that this scenario requires meeting specific criteria.
Using a Second VA Loan While Keeping the First:
To have two VA loans concurrently, you generally need to meet one of the following conditions:
- Your remaining entitlement covers all or part of the second loan: If your proposed second loan does not exceed the available remaining entitlement, you can have both loans at once with $0 down payment. If the total of both does exceed the amount of remaining entitlement. you can still obtain the loan by making a down payment equivalent to 25% of the overage. For example, if you only have enough remaining entitlement to borrow $300,000, but want to buy a home that costs $400,000, you would be required to make a 25% down payment on the amount that exceeds $300,000…in this case, a $25,000 down payment. (100,000 / .25 = $25,000)
- Entitlement restoration on the first loan: By restoring your entitlement on the first loan, you can regain eligibility for a second VA loan switch $0 down payment. Suppose you've paid off your previous VA loan or sold the property you bought with it. In that case, you can apply for a restoration of your entitlement to obtain another VA loan. The process varies depending on the situation, but it typically involves completing paperwork and showing that you no longer have a VA loan obligation.
Buyer Beware: Debt-to-Income Ratio
Keep in mind that even if you're eligible for two VA loans, your overall financial picture will be scrutinized by lenders. They'll assess your debt-to-income (DTI) ratio to ensure you can handle both mortgages simultaneously. A healthy credit score and stable income will work in your favor.
Using VA Loans for Investment Properties
Now, here comes the million-dollar question: Can you use VA loans for investment properties? The short answer is no. VA loans are intended for primary residences only. You can't use them to finance rental properties or vacation homes.
Refinancing and the VA Streamline Option
As you build equity in your current home or encounter changes in interest rates, you might consider refinancing. The VA Streamline Refinance, also known as the Interest Rate Reduction Refinance Loan (IRRRL), allows you to refinance your existing VA loan with minimal hassle.
In conclusion, while most military service members only have one VA loan at a time, there are circumstances where you can obtain multiple VA loans, thanks to remaining entitlement or entitlement restoration. However, multiple VA loans are somewhat rare and require meeting specific criteria.
Before making any financial decisions, it's wise to consult with a VA-approved lender who can guide you through the process and help you navigate the intricacies of VA loan eligibility. Owning a home is a significant milestone, and VA loans are a fantastic tool to help you achieve that dream while honoring your dedication to our great nation.
As you embark on your homeownership journey, remember that you and your family deserve the best. Whether it's your first home or your forever home, know that your sacrifices and service are cherished, and we're here to support you every step of the way. Happy house hunting, and may your future be filled with love, joy, and a place to call your own!