Can You Buy Multiple Homes With a VA Loan?
Explore if you can purchase multiple homes with a VA loan. Understand the specific conditions and processes to leverage your benefit for additional properties.
It is possible to purchase multiple homes using a VA loan, a benefit designed to assist eligible service members, veterans, and surviving spouses in achieving homeownership. The VA loan program offers significant advantages, such as requiring no down payment for those with full entitlement. Understanding the specific rules and how entitlement works is important for those considering a second VA-backed home purchase.
Understanding VA Loan Entitlement
VA loan entitlement represents the amount the Department of Veterans Affairs (VA) guarantees to a lender. This guarantee helps lenders reduce their risk, often allowing them to offer favorable terms like no down payment. Entitlement is a lifetime benefit, yet its use is subject to specific regulations.
A Certificate of Eligibility (COE) details a borrower’s entitlement, indicating either full or reduced entitlement. Full entitlement generally means the VA will guarantee up to 25% of the loan amount, even if it exceeds conforming loan limits, provided the borrower qualifies. For loans, a basic entitlement of $36,000 applies, representing 25% of $144,000. Bonus entitlement ensures the 25% guarantee for larger loan amounts.
When a VA loan is used, a portion of this entitlement becomes “tied up” with the property. This used entitlement typically equals 25% of the original loan amount. The remaining entitlement is the portion still available for future VA loan use.
Using Your Entitlement for Multiple Properties
The ability to secure a second property with a VA loan hinges on understanding and utilizing any remaining entitlement. To determine how much remaining entitlement is available for a new purchase, the used amount is subtracted from the maximum entitlement allowed in the new property’s county. The maximum entitlement is typically 25% of the conforming loan limit for that specific area. For example, if the standard VA loan limit in a county is $806,500, the maximum entitlement for that area would be $201,625.
The maximum amount a veteran can borrow without a down payment on a second home is typically four times their remaining entitlement. If the desired loan amount exceeds this figure, a down payment equal to 25% of the difference between the loan amount and the maximum zero-down amount would likely be required. County loan limits influence the available entitlement and the ultimate loan amount that can be secured without a down payment.
Specific Scenarios for Additional VA Loans
A common scenario involves relocation, such as a permanent change of station (PCS) for active-duty military personnel. If the original home purchased with a VA loan is not sold, the remaining entitlement can often be used for a new home at the new duty station. The new property must meet the VA’s occupancy requirements, meaning the veteran intends to reside there as their primary residence.
Another possibility arises when a veteran initially used only a portion of their entitlement on a smaller first home. The unused “remaining entitlement” can then be applied toward a second property.
Entitlement can also be restored, freeing it up for future use. Selling the first home and paying off the VA loan fully restores entitlement, making the full benefit available for a new purchase. Alternatively, a one-time restoration of entitlement is possible if the initial VA loan is paid off (e.g., by refinancing into a conventional loan) but the veteran retains ownership of the property. This one-time option allows for a second VA loan while keeping the first property.
The VA mandates that any property purchased with a VA loan must serve as the borrower’s primary residence. This requirement applies to each home financed with a VA loan. Generally, the borrower or their spouse or dependent must occupy the home within 60 days of closing. Lenders often expect at least 12 months of residency.
Applying for an Additional VA Loan
The process of applying for an additional VA loan emphasizes confirming available entitlement. The initial step is to obtain an updated Certificate of Eligibility (COE) from the VA. This document verifies a veteran’s eligibility and provides details regarding their remaining entitlement. While a veteran can request their COE directly, an approved VA lender can often retrieve it instantly.
Once the COE is secured, the next step involves finding a VA-approved lender. Not all lenders participate in the VA loan program, so selecting one experienced with VA financing is important. Borrowers then undergo a prequalification process, where the lender evaluates their creditworthiness, income, and existing debts to determine the maximum loan amount they can afford. This financial assessment helps set realistic expectations for the home search.
After finding a suitable property and having an offer accepted, the formal loan application process begins. This includes submitting comprehensive financial documentation, such as pay stubs, tax returns, and bank statements.
The VA also requires an appraisal of the property to ensure it meets minimum property requirements and to establish its market value. The lender’s underwriting team assesses all provided information to grant final loan approval. The process culminates in the loan closing, where all final documents are signed and property ownership is transferred.