Can you Reuse Your VA Home Loan Benefits?
11-05-2020 • MHS Lending
One of the most common myths about the VA Loan is that you can only use this benefit once. In actuality, reusing VA Home Loan benefits is quite common amongst veterans and military members. Fortunately, there is no limit on the amount of times you can reuse your VA Loan. If you are eligible, you can take advantage of this life-long benefit and reuse your VA Home Loan multiple times.
You can reuse your VA Home Loan throughout your life
Once you have earned your VA Home Loan, you are eligible to use this benefit for life. Lenders who work with veterans and service members that want to reuse their VA Home Loan benefits will look into their entitlement. This term can be a bit tricky, which is why working with a VA approved lender is the way to go. Your lender will work with you and evaluate your past use of the VA loan to determine what you are still able to use. These benefits are unparalleled in the mortgage industry and it’s worth looking into what you’re entitled to.
Entitlement is given to each borrower who meets the VA’s eligibility requirements. Since the Department of Veterans Affairs backs a portion of your loan, the dollar amount that they back is your entitlement. This is how you are able to secure a home loan without having to put any money down. For those who have their full entitlement (most of the time first-time home buyers), you can borrow as much as your lender approves you for. On the other hand, you may have already used a portion of your entitlement towards another VA Loan. If so, you may have to put some money down when buying a home.
What if you used all of your entitlement?
The good news about the VA benefits is that if you are eligible, they are available to you for life. This means if you have used all of your entitlement on one loan but then paid that loan in full, you can have that entitlement restored. You can either pay the loan in full over time or sell the home and have the loan paid in full due to a new buyer. Regardless of how the loan is satisfied, once it is, you can restore your entitlement and start fresh.
If you do not want to sell the home you paid off but would rather use it as an investment property or vacation home, it’s possible to use a one-time restoration benefit. In special circumstances like this one, you’ll want to work with your lender to determine your best course of action.
You can have more than one VA Home Loan at the same time
If you do not use all of your entitlement, you may be eligible to use the rest towards another property. This benefit allows you to have more than one VA Home Loan at the same time. The best way to find out how much of your entitlement is still remaining is to check your certificate of eligibility. If you don’t have enough entitlement to completely remove a down payment, you may still be able to get a VA Loan. In these cases, borrowers will likely have to make a down payment, although often lower than what other types of loans require.
How does reusing your VA Home Loan benefits affect fees?
The funding fee is a charge the government adds to almost every VA Home Loan in order to keep the program running. With your first VA Loan the fee is often lower than any subsequent use. To determine how much your funding fee is, the Department of Veterans Affairs breaks it down in a chart.
With each subsequent use of your VA Home Loan benefits, your funding fee may raise. For example, if your down payment is less than 5% of the home price on your first use your VA funding fee will be 2.3% (as of 2020). After your first use, if your down payment is less than 5%, your funding fee will raise to 3.6%. Even with the funding fee, the advantages of a VA Loan are strong, making home ownership a breeze for eligible veterans and service-members.
The benefits of the VA Loan are incredibly powerful and reusing them throughout your life is a powerful tool. Buying a home as a military member or veteran with the VA Home Loan can be much more affordable. If you think you’re eligible for a VA Home Loan or would like to reuse your VA Home Loan benefits, why not start now? Reach out to our team at Military Home Spot Lending today at 619-728-7620 and we’ll help you get started! It’s time to take advantage of your lifelong benefits that you worked hard to earn. Veteran to veteran, we’re grateful to serve you.