Life in the service can be unpredictable. A Permanent Change of Station (PCS) order can uproot you and potentially your family suddenly, even if you’ve just bought a home with a VA loan. In these moments, you may ask yourself what your options are for either selling your home or obtaining a second property with an additional VA loan.
For active duty military members and Veterans, the opportunity to purchase a second home while utilizing the benefits of a VA loan can be very appealing. We’ll explore the guidelines and scenarios for obtaining multiple VA loans. Let’s break it down.
It is possible to have two VA loans for two separate properties simultaneously. Both VA loans must be for primary residences and adhere to all other occupancy requirements. The VA's second-tier entitlement provides eligible individuals with the ability to obtain a second VA loan, allowing them to acquire a second home or retain their current residence as a rental property when they receive PCS orders.
Under normal circumstances, a Veteran is typically eligible for one VA loan at a time. However, there are situations where a Veteran may be able to have two loans simultaneously. Not every Veteran is eligible for another VA loan and depends on the Veteran’s remaining VA entitlement. The second-tier entitlement offered by the VA enables qualifying Veterans to leverage their VA loan benefits once again, even if they have an existing VA loan for their primary residence.
Here are some common scenarios where this might be possible:
When a Veteran pays off a VA loan in full and sells the property, they can apply to restore their entitlement. The restored entitlement can then be used to obtain a new VA loan while still having an existing VA loan. This process allows the Veteran to have two VA loans concurrently.
If a Veteran has partial entitlement remaining after using a portion of it for their first VA loan, they may be eligible for a second VA loan. The amount of remaining entitlement determines the maximum loan amount the Veteran can qualify for on the second loan. The combined loan amounts of both VA loans cannot exceed the maximum limit set by the VA.
If you can find a qualified Veteran to assume your current VA loan, their entitlement can act as a substitute for yours and restore your VA loan eligibility. The current VA loan Veteran must be current on the loan or if they’re not, any past due amounts need to be paid by closing. The new buyer must meet any credit and income requirements, assume all mortgage obligations and pay fees. The VA funding fee of 0.5% must be paid by either the original owner or the new one depending on the negotiation.
VA loans cannot be transferred from one property to another. However, they are assumable, which means they can be transferred between borrowers. If you sell a home with an outstanding VA loan, a buyer can assume the mortgage instead of bringing their own financing. That said, the buyer would have to pay the difference between the sale price and the outstanding balance as their down payment. Additionally, the buyer would have to qualify for a VA loan for the seller to have their entitlement restored.
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