Special offer

Using Multiple VA Loans at Once is Possible - Often No Money Down

By
Mortgage and Lending with Blue Ridge Bank Mortgage NMLS # 78989

A fairly common occurrence for Veterans is the need for having multiple VA loans at once. This is called accessing a Veteran’s bonus entitlement or 2nd tier entitlement. Many do not realize that this is even a possibility. This financing option available through the Veterans Administration is available to service members, Veterans, and qualified surviving spouses not just once but twice.

When Are Multiple VA Loans Needed?

There are situations in a Veteran’s life that come up in which being able to get another VA loan is advantageous. The most common are moving out of a current home or having a derogatory housing event on a prior VA loan. Let’s discuss these two scenarios.

Rent Current Home and Use VA to Buy Another Home

Sometimes, by choice or necessity, owners may lease their current home. There are two areas at play in this case:

  1. The Veteran may use rental income to offset the current residence. Up to 100% of the new rental income may be used but not more than the total mortgage payment on the rental. If the new lease is $1,100 and the mortgage payment including taxes and insurance is $1,000, $1,000 may be used to offset the prior mortgage. Therefore, qualifying for the new home is easier.
  2. The next area is accounting for the used entitlement on the new rental. Lenders use a formula to calculate the new VA loan amount. Reducing the entitlement available will eventually require a down payment as the price rises. We explain how this works further down in the article.

VA Loans After VA Foreclosure or Short Sale

Like mentioned, sometimes things happen. There could be a relocation, credit situation, and/or a downturn in the market which could cause a foreclosure or short sale. When this happens to a home with a VA loan, it affects the Veteran’s VA entitlement. A VA short sale or foreclosure does the same. The loss reduces the available entitlement. Unless the Veteran pays this deficiency back to clear up the entitlement, using VA to buy a house will need to be a bonus entitlement scenario.

The great thing is VA will still allow multiple VA loans even though VA took a loss on a prior property. Just like a rental property, any entitlement on a prior property will reduce the amount of bonus entitlement.  VA basically says “I’m sorry you went through this, but I’m going to give you a second chance. Although, I may lower the amount I can lend you because of my loss.”

Notice we mentioned earlier that “often” there is no down payment. Some scenarios require a down payment, especially on larger VA loans. The larger the loan amount, the better the chance of down payment.

Is a Down Payment Required for Multiple VA Loans?

This is a common question. There are some rules for accessing a Veteran’s bonus entitlement. The first step is to obtain the certificate of eligibility. We can request this from VA. The VA certificate of eligibility shows lenders if any portion of the entitlement is tied up. If the entitlement will not be restored to the original $36,000 basic amount, then the bonus or 2nd tier entitlement is required to have multiple VA loans.

Next, the new loan amount must exceed $144,000. I know, strange rule, but it is one of the requirements. Then, lenders use a calculation which factors the new purchase price, county loan lending limit, and the used entitlement to determine down payment. As the purchase price of the new home increases, the chance of down payment does as well.

Other VA Loan Advantages

Having multiple VA loans at once is a quite the advantage, but there are more benefits:

Building Wealth Through Real Estate

We have spoken about using bonus or 2nd tier entitlement out of necessity, but it may also be out of choice. You have probably seen plenty of HGTV shows telling how to buy homes as an investment. Whether you know it or not, when you buy your first home, you are a real estate investor. The cool thing as a Veteran is you have probably purchased your first home no money down, but it goes up a notch after you have lived in your home for a year or several and have decided to rent the home. Then, Veterans may use this tool we have been discussing of having multiple VA loans at once to buy that second property. An additional tool to potentially help the next investment is our popular VA Renovation Loan. It allows Veterans to use 100% financing to purchase and rehab a primary residence.

If this interests you, make sure that you treat real estate investing as a business. Explore all options, consult with experts, and even make a business plan. You never know, your first home may be the start of a wealth building strategy for you.

Contact an OVM Financial loan officer today for a VA loan strategy that fits your goals and scenario!

Do You Need Help Calculating Your 2nd Tier VA Entitlement? We are happy to help!

Link to original article written by Russell Smith

Posted by

Russell Smith - Your Mortgage Lending Expert

NMLS # 78989

Comments (4)

Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Prop. Mgr, Wenatchee, WA

Hi Russell,
I did NOT know about the possibility of using multiple VA loans at the same time. Thanks for the post. 

Aug 14, 2018 10:13 AM
Russell Smith
Blue Ridge Bank Mortgage - Wilmington, NC
Loan Officer Communication & Execution You Deserve

Thank you for your response. That is a very common belief. I'm glad you know now. I always say it is probably the best loan in America because it has so many great features for Veterans.

Aug 14, 2018 10:15 AM
Debb Janes
Nature As Neighbors - Camas, WA
Put My Love of Nature At Work for You

Wow Russell. Who knew? You do, obviously. Thanks for sharing this important information with us. 

Aug 25, 2018 09:04 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi Russell

This was news to me, so thanks for the education for us all!

Jeff

Aug 25, 2018 08:17 PM