When Can You Use Your VA Home Loan More Than Once?
09-01-2021 • MHS Lending
The VA Home Loan is one of the most powerful mortgages available and it’s reserved exclusively for veterans and service members. Since this loan has some unparalleled benefits, a common misconception is that it is a benefit that can only be used once. On the contrary, VA Loan benefits can actually be used multiple times depending on the circumstances and there is no set limit to the number of times you can use your VA Loan benefits. To help understand further, we’ve debunked the myth and taken a deep dive into the ins and outs of using your VA Home Loan benefits more than once.
When can you use your VA Home Loan?
For eligible military members, veterans, and some military spouses, the VA Home Loan benefits are available for life. The Department of Veterans Affairs (VA) who backs these loans have very specific guidelines for who is eligible. Factors like the amount of time served during wartime and peacetime and branch of military matter, but as long as you meet the eligibility requirements set forth by the VA, you will be able to take advantage of the incredible benefits and can do so multiple times throughout your lifetime.
What is VA entitlement?
The VA loan entitlement is the maximum dollar amount that the government will pay back to your mortgage lender if you happen to go into mortgage default (or fail to repay your loan). This entitlement is important when determining how much your lender will approve you for when you’re shopping for a house and is factored into your full home purchase at the time of closing.
How do you restore your VA Loan eligibility?
If you have already used your VA Loan entitlement towards a home purchase or refinance, your entitlement may be tied up. In order to restore your status so you can take advantage of the VA Loan again, you have a few options. First, you can sell your existing home and pay off the mortgage you currently have in full. This will help you regain your full entitlement which can be used again towards your next purchase. Another option is that you can pay off your existing VA Loan in full. If you have enough money to cover the remaining balance on your VA Loan, this gives you the opportunity to use your VA Home Loan benefits again.
When you are ready to restore your entitlement, you’ll need to complete VA Form 26-1880 (or VA Form 26-1817 if you are a surviving spouse). The VA Form 26-1880 is the same form you use to obtain your Certificate of Eligibility (COE) and will help you start the process of getting another VA Loan and confirm you are able to do so.
While it is a general rule of thumb that your loan must be completely paid off before your VA entitlement is restore, there is one exception. In the case of military reassignment, if you have enough entitlement remaining, you may be able to use the remaining VA home loan benefit without selling your previous loan or paying off the loan in its entirety.
How does reusing the benefit affect funding fees?
The VA funding fee is a one-time payment that you make when you refinance or purchase a home using a VA Loan. This fee is paid directly into the VA Loan program so it can stay funded for other veterans and servicemembers and can be bundled into your closing costs. By reusing the VA Home Loan again, you may incur slightly higher fees while still taking advantage of a loan with no down payment or private mortgage insurance.
At MHS Lending, we are experts in working with military families and veterans and have years of experience navigating the VA Loan process. If you have any questions regarding the VA Loan or you're ready to take advantage of your hard-earned military benefits, give us a call at 619-728-7620.