Can You Have More Than One VA Loan at a Time?

The VA loan program benefits eligible service members, veterans, and surviving spouses seeking homeownership. While many assume it is a one-time use benefit, it is possible to have more than one VA loan at a time under specific conditions.

Understanding VA Loan Entitlement

VA loan entitlement represents the amount the Department of Veterans Affairs (VA) guarantees to a lender if a borrower defaults on their VA loan. This guarantee encourages lenders to offer favorable terms, such as no down payment requirements for eligible borrowers. Entitlement is not a cash amount provided to the borrower but rather a promise from the VA to cover a portion of the loan.

There are two primary types of VA loan entitlement. Basic entitlement is typically $36,000, guaranteeing 25% of loans up to $144,000. Bonus entitlement, or second-tier entitlement, applies to loans exceeding $144,000, allowing larger loan amounts without a down payment. This is tied to conforming loan limits set by the Federal Housing Finance Agency (FHFA).

When a VA loan is active, a portion of the borrower’s entitlement is considered used with that loan. This means the amount of available entitlement directly impacts the ability to secure additional VA loans or to borrow without a down payment on a subsequent loan. Your Certificate of Eligibility (COE) will indicate your entitlement status, showing whether you have full entitlement or if a portion is currently being used. Full entitlement means you have never used a VA loan, or a previous VA loan has been paid off and the property sold, freeing up your full benefit.

Using Your VA Loan Entitlement for Multiple Homes

Having multiple VA loans is primarily governed by the amount of VA loan entitlement still available. One common scenario involves using “remaining entitlement.” If a borrower’s first VA loan did not utilize their full entitlement, the unused portion can be applied towards a second VA loan. This often occurs when the initial loan amount was relatively small, leaving significant entitlement available for a subsequent home purchase.

Active-duty service members frequently utilize this option when facing a Permanent Change of Station (PCS) order. They might choose to retain their current home, possibly converting it to a rental property, and then purchase a new primary residence at their new duty station using their remaining VA loan entitlement. This allows for continuity in housing arrangements without having to sell the original property. While VA loans are for primary residences, this specific situation accommodates the housing needs of military personnel.

Refinancing an existing VA loan can also play a role in managing multiple properties. Certain VA refinance options, such as the Interest Rate Reduction Refinance Loan (IRRRL), do not require the use of new entitlement, allowing a borrower to keep their existing entitlement status unchanged while adjusting their loan terms. Additionally, in special circumstances, a VA loan can be used for a multi-unit property, such as a duplex, provided the borrower occupies one of the units as their primary residence.

Calculating Remaining VA Loan Entitlement

Calculating remaining VA loan entitlement involves understanding the maximum entitlement available in your area and subtracting the entitlement already used. For borrowers with full entitlement, there are no VA loan limits, and the VA will guarantee up to 25% of the loan amount a lender is willing to provide.

For those with reduced or partial entitlement, the calculation becomes more specific. The maximum entitlement is based on 25% of the conforming loan limit for the county where the new home is located. To find your remaining entitlement, you subtract the entitlement already used on your current VA loan from this maximum county entitlement. For instance, if you used $75,000 of entitlement on a previous loan and the maximum entitlement for your new county is $191,638, your remaining entitlement would be $116,638. You can then multiply this remaining entitlement by four to estimate the maximum loan amount you could potentially borrow without a down payment.

A VA funding fee is required for most VA loans, varying based on whether it is a first-time or subsequent use and the amount of any down payment. For example, a subsequent use with no down payment incurs a higher funding fee, around 3.3% of the loan amount, compared to a first-time use. Veterans receiving VA compensation for service-connected disabilities are exempt from paying this fee. To verify your entitlement status and obtain necessary information, acquire a Certificate of Eligibility (COE). This document can be obtained quickly through your lender via an online system or by applying directly through the VA’s eBenefits portal.

Restoring VA Loan Entitlement

Restoring VA loan entitlement allows eligible individuals to regain access to their full VA loan benefit for future home purchases, distinct from simply utilizing remaining entitlement. The most common method for full entitlement restoration occurs after selling the home tied to the original VA loan and fully paying off that mortgage. Once the property is sold and the loan is settled, the borrower can apply to have their entitlement reinstated. Another way to restore entitlement is by refinancing an existing VA loan into a non-VA loan, such as a conventional or FHA loan. This action frees up the VA entitlement because the VA is no longer guaranteeing the mortgage.

In some cases, entitlement can be restored if another eligible veteran assumes the existing VA loan and substitutes their own entitlement for the original borrower’s. Additionally, the VA offers a “one-time restoration” option. This unique provision allows a borrower to restore their full entitlement even if they have paid off their initial VA loan but still own the property. This is particularly useful if a borrower wants to keep their first home, perhaps as a rental, and purchase a new primary residence with their full VA benefit.

After utilizing this one-time restoration, subsequent restorations require selling the property. Applying for restoration involves submitting VA Form 26-1880, the Request for a Certificate of Eligibility, along with proof of loan payoff or property sale.