Veterans can use their VA-guaranteed home loan benefit more than once

Did you know that you can use your VA-guaranteed home loan benefit more than once? Many Veterans and surviving spouses think it’s a one-time benefit, but it isn’t. The VA home loan is a lifetime benefit. In many cases, you can keep your current home and use your remaining entitlement to buy another home to live in.

Life changes, and it changes often for military families. Service members get orders to a new duty station. Veterans take jobs in new cities. Families outgrow their homes. If you have enough remaining entitlement, or VA has restored entitlement you used on a previous home, and you meet your lender’s requirements, you may be able to use your VA-guaranteed home loan benefit again. That holds true even while you also have another VA-backed home loan.

Every VA loan must meet VA’s occupancy requirements. In most cases, that means you must certify that you intend to live in the home. You can’t use a VA loan to buy a vacation home or an investment property.

Here’s an example:

John bought his first home in Tampa, Florida, in 2018 with a $300,000 VA-guaranteed home loan. He has lived there ever since, satisfying the VA occupancy requirement of two years. This year, John took a new job in Orlando, Florida. Instead of selling his Tampa home, he wants to keep it and buy a new home in Orlando for $500,000.

If John has enough remaining entitlement to support it – or makes a down payment if his lender requires one – and meets credit, income and occupancy requirements, John can get a second VA-guaranteed home loan.

Here’s how John’s remaining entitlement works out:

• John’s Certificate of Eligibility (COE) shows in the Entitlement Charged column that he has already used $75,000.
• The county loan limit for the Orlando property that John wants to buy is $832,750.
• Note: Visit the Federal Housing Finance Agency’s website for information on county loan limits (always use One-Unit Limit).
• Multiply the county loan limit by 25%: $832,750 x 25% = $208,187.50
• Subtract the entitlement John has already used: $208,187.50 – $75,000 = $133,187.50
• John’s remaining entitlement is: $133,187.50
• Multiply John’s remaining entitlement by 4: $133,187.50 x 4 = $532,750
• $532,750 is the maximum loan amount that would receive a 25% guaranty from VA.

Because John’s remaining entitlement supports a loan of up to $532,750, he can buy the $500,000 Orlando home with no down payment. Three conditions still apply: the home must appraise at value, John must intend to occupy the residence, and he must meet his lender’s underwriting requirements.

In this example, John now has two active VA loans: one on the Tampa property and one on the Orlando property. This demonstrates that the VA-guaranteed home loan benefit can support changing housing needs over time.

Four things to check first

• Know your remaining entitlement. Entitlement tied to an existing VA loan doesn’t automatically disqualify you. As a rule of thumb, your lender will want enough remaining entitlement to guaranty at least 25% of the new loan before approving a zero-down VA-guaranteed home loan. Depending on the loan amount and your remaining entitlement, your lender may require a down payment. If you paid off a previous VA loan in full, VA may be able to restore that entitlement.
• Understand the occupancy requirements. You’ll typically need to certify that you intend to occupy the home. A VA loan cannot be used to buy a vacation home, and misrepresenting your intent to occupy could result in legal action against you.
• Understand the funding fee. Using your VA-guaranteed home loan benefit again may result in a higher VA funding fee, unless you qualify for an exemption – for example, if you are a Veteran receiving service-connected disability compensation.
• Budget for multiple mortgages. Multiple homes mean multiple mortgage payments, along with taxes, insurance, maintenance, and other ownership costs. Make sure your budget can support the additional expenses.

Too complicated? Just call us at 877-827-3702 and we will help you figure out your remaining entitlement and answer other questions. You can also review your COE and then talk with a VA-approved lender about your options.

With the right planning, the VA-guaranteed home loan benefit you earned can keep working for you throughout your life—whether you’re buying your first home or your next one!