Can I Have Two VA Loans At The Same Time?
Yes, you can have two VA loans at the same time. However, there are certain limitations and requirements that must be met in order to qualify for additional VA loans. You may be considering this option because of the need to make a change from your existing home for a variety of reasons. Or you may be on active-duty with PCS order to a new duty station, plan to buy a home and need to have two or even three VA loans at the same time. If you find the following information difficult to understand or confusing – you’re not alone. Fully understanding these concepts took me several experiences to master and it may be best for you to talk with a VA loan specialist about having two VA loans at the same time.
Understanding VA Loan Entitlement
To help you understand VA loan entitlement, it’s important to note that the Department of Veteran Affairs does not lend money directly. Instead, it provides a 25% guarantee on any loan amount that is lent to a veteran or service member for the purchase or refinance of a home. This means that if a veteran defaults on a loan, the VA will pay up to 25% of the loan amount to the lender. This guarantee serves as a safety net for veterans and their lenders alike and is what allows a VA loan to offer its many benefits over other loan types.
As part of verifying a veteran’s or service member’s eligibility to get a VA loan, a copy of the VA Certificate of Eligibility (COE) must be requested. The COE is proof that the service requirement has been met and that the person has VA loan eligibility. Reviewing the COE shows that the veteran has basic VA loan entitlement of $36,000 which would be good for a maximum loan amount of $144,000. However, most veterans use more than their basic VA loan entitlement with just one VA loan.
If you’ve used more than the basic entitlement amount, the remaining comes from your bonus VA loan entitlement. It is often also called “hidden” or “second-tier” entitlement. This is the remaining entitlement available to be used, but the amount is based on the 2023 county loan limit the property is located in.
Loan Limits For VA Loans
When it comes to how many VA loans you can have at one time, the answer will depend on the county loan limit of where the new property will be located and how much VA loan entitlement you have already used. Each year the Federal Housing Finance Agency (FHFA) sets loan limits by county throughout the United States based on the average home price. The VA follows these limits set by FHFA and is the maximum amount of entitlement a veteran can have with two or more VA loans at the same time. For 2023, the maximum VA loan limit is $726,200 in most counties. Other high-cost areas have a maximum loan limit of $1,089,300.
You can check county loan limits on FHFA’s website.
Down Payment Requirements
One of the best benefits of a VA loan is that a down payment is not required. Veterans can finance up to 100% of the purchase price plus the applicable VA funding fee. In the event that you are able to have more than one VA loan at a time, a down payment may be required. The amount you would have to put down is determined by the remaining amount of entitlement you have and what the new loan amount will be. Having a copy of the COE showing your existing VA loan will be needed.
As you recall, the VA provides a 25% guarantee to lenders. If your new loan amount exceeds the amount of entitlement you have remaining, you will need to provide a down payment for 25% of the difference. Using the current loan limit of $726,200 for most counties, it would be divided by four (25%) and then the current entitlement amount from your COE subtracted. The figure is the remaining entitlement amount available. To get the loan amount, multiple it by four. If your new loan amount is more than the remaining loan amount, you will need a down payment based on 25% of the difference between the calculated amount and your new loan amount.
Calculating Your Remaining Entitlement
$726,200/4 = $181,550
$181,550 – $100,000 (currently used entitlement) = $81,550 (remaining entitlement)
$81,500 * 4 = $326,200
$500,000 (new VA loan amount) – $326,200 = $173,800 (difference without entitlement)
$173,800/4 = $43,450 down payment required
Departing Residence & Rental Income
A VA loan can only be used for the purchase of a primary residence, However, you can turn your current home into an investment property when buying a new home with a VA home loan. The home that you will be departing (moving out of) will need to have an executed twelve month lease and any rental income received can only be used to offset the home’s current mortgage payment. This is different from other loan programs where you can use 75% of the rental income to apply towards the existing loan payment.
In the event that you do have any additional properties used as an investment property, three months of mortgage payments (cash in the bank) will be required for each property. Reserves are not required for the new home or the residence you’re departing.
VA loans are a great option for veterans and active-duty military personnel who want to purchase a home. Knowing how many VA loans you can have at one time is important, as it dictates how much money you’ll need to put down and how your monthly payments will be structured. With the right knowledge of eligibility criteria, loan limits, benefits, rental income considerations and other factors related to multiple VA loans at once, this program can provide an excellent opportunity for those in search of homeownership. I hope that this article has helped shed some light on how you can have two VA loans at one time and make informed decisions about your options!