Can You Get a VA Loan for a Second Home?
Can you use a VA loan for another property? Understand how primary occupancy rules and entitlement guide eligibility for subsequent VA loans.
VA loans offer a significant benefit to eligible service members, veterans, and surviving spouses, primarily designed to facilitate homeownership. These government-backed mortgages often feature favorable terms, such as no down payment requirements and competitive interest rates. A common question is whether they can be used for a “second home.” The answer involves understanding occupancy rules and VA loan entitlement.
The Primary Residence Requirement for VA Loans
VA loans are explicitly intended for the purchase or refinance of a borrower’s primary residence. This means the property must be the home where the veteran, or their spouse or dependent, intends to live the majority of the time. Borrowers must certify their intent to personally occupy the property. This certification ensures the benefit serves its intended purpose of providing housing.
Generally, the borrower must occupy the home within a “reasonable time” after the loan closes, typically 60 days. However, the VA recognizes that military life can present unique challenges, and exceptions to this rule exist. For instance, active-duty service members on temporary duty or with upcoming deployments may be granted extensions, often up to 12 months, if they can specify a future occupancy date. Additionally, a spouse or dependent child can fulfill the occupancy requirement if the service member is unable to occupy the home due to military orders.
Misrepresenting occupancy intent can have serious consequences, as the VA and lenders require signed certifications affirming the borrower’s intent to occupy.
Understanding Your VA Loan Entitlement
VA loan entitlement represents the amount the Department of Veterans Affairs guarantees to a lender if a borrower defaults on their loan. This guarantee enables lenders to offer favorable terms, such as no down payment. While the VA guarantees a portion of the loan, it does not directly lend the money; private lenders issue VA loans.
Entitlement is generally divided into two categories: basic and bonus (sometimes called second-tier entitlement). Most eligible service members and veterans receive a basic entitlement of $36,000, which historically allowed the VA to guarantee loans up to $144,000. For loans exceeding $144,000, bonus entitlement becomes applicable, and the VA typically guarantees up to 25% of the loan amount, even above standard conforming loan limits. With full entitlement, there is generally no VA-imposed loan limit, allowing borrowers to borrow as much as a lender qualifies them for based on income and credit.
To verify eligibility and determine available entitlement, veterans must obtain a Certificate of Eligibility (COE). This official document, often VA Form 26-1880, confirms that a veteran meets the service requirements for a VA loan. The COE details the veteran’s service history, entitlement code, and any remaining entitlement. Obtaining a COE can be done through a VA-approved lender, online via the VA’s eBenefits portal, or by submitting a request via mail. While online or lender requests often provide the COE within minutes, mail requests may take several weeks.
Entitlement is “used” when a VA loan is obtained, meaning a portion of the benefit is tied to that property. Full entitlement typically means a veteran has never used their VA loan benefit, has paid off a previous VA loan and sold the property, or had their entitlement fully restored. Conversely, partial or reduced entitlement occurs if a veteran currently has an active VA loan, has defaulted on a previous VA loan, or has repaid a loan but still owns the home. The concept of “restoration of entitlement” allows veterans to reuse their benefits. Full restoration is possible after selling the property and completely paying off the VA loan. There is also a “one-time restoration” option, which allows a veteran to restore their full entitlement for a new primary residence even if they have paid off the original loan but still own the property. This one-time restoration is useful if a veteran converts their previous VA-financed home into a rental while purchasing a new primary residence with a VA loan.
Securing Another VA Loan for a Primary Residence
It is possible for a veteran to obtain another VA loan for a different primary residence. This often occurs when the veteran’s housing needs change, and they still meet the primary residence occupancy rule for the new property. The ability to secure a subsequent VA loan hinges on the veteran’s remaining entitlement and the conditions under which it can be used or restored.
One common scenario involves using remaining entitlement if the first VA loan did not exhaust the veteran’s full benefit. This allows a veteran to purchase a new primary residence while potentially keeping their previously VA-financed home. For instance, if a veteran moved for work and decided to rent out their first VA-financed home, they could use any remaining entitlement to purchase a new primary residence in their new location. Both properties, if simultaneously financed with VA loans, must meet the primary residence occupancy rule at the time of each respective purchase.
Relocation due to military orders, known as Permanent Change of Station (PCS), is a frequent reason veterans seek a second VA loan. In such cases, active-duty service members may purchase a new primary residence at their new duty station while retaining their previous VA-financed home, which can then be rented out. This provision acknowledges the transient nature of military service and ensures housing flexibility.
Full entitlement restoration is another pathway to obtaining another VA loan. This occurs when a veteran sells their previously VA-financed home and completely pays off the loan. Once the loan is paid off and the property sold, full entitlement is restored, allowing them to use their VA loan benefit again for a new primary residence.
The one-time entitlement restoration offers a unique opportunity for veterans who have paid off their initial VA loan but wish to retain the property, perhaps converting it into a rental, while still using their VA benefit for a new primary residence. This specific restoration allows the veteran to regain full entitlement for a new home purchase without having to sell the first property. However, this is a one-time benefit, and subsequent restorations would typically require selling the property and paying off the loan.
When pursuing another VA loan, veterans will work with a VA-approved lender, who will use the veteran’s Certificate of Eligibility to verify available entitlement. The new property must also meet the VA’s Minimum Property Requirements (MPRs), which ensure the home is safe, structurally sound, and sanitary. These requirements cover aspects such as adequate living space, functional mechanical systems, a stable roof, and access to clean water. Standard lending qualifications, including credit score, debt-to-income ratio, and sufficient income, will still apply, as determined by the individual lender.