How Many Times Can I Use My VA Home Loan?

The short answer: You can use your VA home loan benefit multiple times throughout your life. There is no limit to the number of times you can use it, provided you meet certain eligibility requirements each time and have restored your VA loan entitlement. Understanding how this works is crucial for veterans looking to leverage this powerful benefit.

Understanding Your VA Home Loan Entitlement

The key to unlocking the repeat use of your VA loan lies in understanding the concept of entitlement. Think of it as your buying power, guaranteed by the Department of Veterans Affairs. This guarantee assures lenders that a portion of the loan will be repaid should you default. There are two types of entitlement:

• Basic Entitlement: This is $36,000, but in practice, lenders usually approve loans up to four times this amount, meaning you can often borrow up to $144,000 without putting any money down.

• Bonus Entitlement: Also known as restored entitlement, it allows veterans to borrow more, often significantly more, than the basic amount. This is critical for repeat use.

Restoring Your VA Loan Entitlement

The magic happens when you restore your VA loan entitlement. This allows you to use the benefit again after you’ve previously used it to purchase a home. There are generally three ways to restore your entitlement:

1. Selling the Property: If you sell the home you purchased with a VA loan and repay the loan in full, your entitlement is generally restored. This is the most common scenario.

2. Paying Off the Loan: If you pay off the loan in full without selling the property, you can apply to have your entitlement restored. You will still own the property, but the VA loan is no longer active.

3. Substituting Entitlement (A Rare Case): Another veteran may assume your VA loan and agree to substitute their entitlement for yours. This is a less common situation but provides another pathway.

The Restoration Process

Restoring your entitlement isn’t automatic. You’ll typically need to provide documentation to the VA showing that the previous loan has been satisfied. This often includes a settlement statement from the sale of your home or documentation proving the loan has been paid in full. The VA then reviews your application and, upon approval, restores your entitlement.

Factors Affecting Re-Use

While the VA loan is a flexible and generous benefit, there are factors that can affect your ability to re-use it:

• Creditworthiness: Lenders will always assess your credit score and debt-to-income ratio when considering a new VA loan. Even with restored entitlement, poor credit can hinder your approval.

• Income Stability: You must demonstrate a stable and reliable income source to qualify for a new VA loan.

• Remaining Entitlement: Even with restored entitlement, you may still have a portion of your original entitlement tied up. This can affect the maximum loan amount you’re eligible for.

• Property Type: The type of property you wish to purchase can also influence loan approval. Some lenders have specific requirements for certain types of properties.

Frequently Asked Questions (FAQs)

1. Can I have two VA loans at the same time?

Yes, you can have two VA loans at the same time under certain circumstances, primarily if you have remaining entitlement. If the home you wish to purchase is in a different location due to a permanent change of station (PCS) or other legitimate reason, and you haven’t completely exhausted your entitlement, it’s possible to obtain a second VA loan. You’ll need to demonstrate you cannot reasonably commute to your new job from your current residence.

2. How do I know how much entitlement I have left?

You can request a Certificate of Eligibility (COE) from the VA. This document details your entitlement status and any remaining entitlement.

3. What is the VA Funding Fee, and does it apply every time I use the loan?

The VA Funding Fee is a percentage of the loan amount charged by the VA to help cover the costs of the loan program. Yes, it generally applies each time you use the VA loan benefit, though the percentage may vary depending on factors like down payment amount and whether it’s your first time using the loan. Some veterans are exempt from the funding fee, such as those with service-connected disabilities.

4. Can I use my VA loan to buy a second home or investment property?

Generally, the VA loan is intended for primary residences. While there are exceptions for situations like PCS orders, using it solely for a second home or investment property isn’t typically allowed. You must intend to occupy the property as your primary residence.

5. If I default on a VA loan, can I still use the benefit again?

Defaulting on a VA loan can severely impact your ability to use the benefit again. It can damage your credit score and potentially lead to foreclosure. However, it’s not necessarily a permanent bar. If you can demonstrate that you’ve addressed the issues that led to the default and have re-established good credit, you may be able to regain eligibility. It’s best to seek credit counseling and consult with a VA loan specialist in such cases.

6. What is a VA Loan Assumption?

A VA loan assumption is when another eligible veteran (or, in some cases, a non-veteran) takes over your existing VA loan. The assumptor agrees to make your loan payments, and you are relieved of your obligation. This can be a valuable option, especially if the loan has a low interest rate. However, you won’t have your entitlement restored until the loan is paid off in full unless the assumptor is a veteran who substitutes their entitlement for yours.

7. Does refinancing my VA loan affect my entitlement?

Refinancing your VA loan, such as with an IRRRL (Interest Rate Reduction Refinance Loan), generally does not affect your entitlement. You’re simply replacing your existing VA loan with a new one, often at a lower interest rate. The original entitlement remains tied to the property.

8. What if I sell my home for less than what I owe on the VA loan?

This is known as a short sale. It can complicate the process of restoring your entitlement. The VA may pursue a deficiency judgment against you for the difference between the sale price and the loan balance. Addressing this deficiency is crucial for restoring your entitlement. It is recommended that you contact the VA to understand your options if you face this situation.

9. Are there any geographical restrictions on where I can use my VA loan?

No, there are generally no geographical restrictions within the United States. You can use your VA loan to purchase a home in any state or territory, provided it meets the VA’s property requirements.

10. Can I use my VA loan to build a home?

Yes, you can use your VA loan to build a home. This requires additional steps and approvals, including submitting detailed construction plans and working with a VA-approved builder.

11. What are the credit score requirements for a VA loan?

The VA itself doesn’t set a minimum credit score requirement. However, lenders typically require a minimum score, often around 620. It is highly recommended that you work with lenders and mortgage brokers who specialize in VA loans, as they will have the most up-to-date information regarding credit score requirements.

12. Can I use my VA loan to purchase a manufactured home?

Yes, you can use your VA loan to purchase a manufactured home, but certain conditions apply. The home must meet specific VA standards for safety and quality, and it must be permanently affixed to a foundation. Not all lenders offer VA loans for manufactured homes, so it’s important to shop around and find a lender experienced in this area.

In conclusion, understanding your VA loan entitlement and how to restore it is key to maximizing this valuable benefit. By staying informed and working with qualified professionals, veterans can successfully navigate the process and achieve their homeownership goals, potentially multiple times throughout their lives.