How Many Times Can You Use a VA Loan?
Qualified individuals can use a VA loan as many times as they wish. The one catch: it must always be for a primary property.
Written by Caitlin McQuade
Reviewed by Melanie Reiff
Eligible active-duty service members, veterans, and spouses can use a VA loan as many times as they wish, but the loans can only be used for a primary property.
Millions of qualified individuals have become homeowners with the help of VA loans. These loans offer massive benefits compared to conventional loans—low-interest rates and no down payment.
If you qualify and are looking to purchase a home, you may be wondering how many times you can use your VA loan within your lifetime.
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How many times can you use a VA loan?
Those eligible may use a VA loan as many times as they wish throughout their lifetime. There is no limit to the number of times an eligible individual can take out a VA loan as long as they qualify with a lender.
The one stipulation here is that VA loans can only be used for primary residences. This means you will not be able to take out a VA loan to purchase a secondary residence or vacation home.
There are occupancy requirements in place to ensure this rule is upheld. Typically, the buyer must live fulltime in the house within 60 days of closing. There are a few exceptions to this rule. For example, the spouse of a service member deployed overseas may fulfill this requirement.
Why use a VA Loan
Veteran Affairs (VA) loans are mortgage loans that give special benefits to service members and veterans looking to become homeowners. With a conventional mortgage, homebuyers may be required to pay up to 3.5% in interest monthly. A VA loan cuts these costs significantly with low interest rates.
The biggest roadblock for potential homeowners is often the down payment. Typically, homebuyers must put down an out-of-pocket payment of at least 20% of the house’s value. VA loans make homeownership accessible to veterans by requiring no down payment.
In place of a down payment most borrowers simply pay a low, one-time VA fee. The fee is typically between 2.3% and 3.6% of the home’s value and decreases the higher the down payment you choose to make. Veterans with a VA-approved disability, those who returned to service after receiving a Purple Heart, and surviving spouses are exempt from this fee.
Key Takeaway Eligible individuals can use a VA loan as many times as they would like, as long as the loan is for a primary residence. There are many benefits to using a VA loan.
Can you take multiple VA loans out at one time?
There are a few instances in which it is possible to take out a second VA loan at a given time. You may purchase a home with a VA loan but then need to relocate for work.
Suppose you receive permanent change of station (PCS) orders and must move to a different state. Your best bet to receive another VA loan with its full benefits is to sell your original property. However, you may have difficulties selling immediately, or wish to rent the home out instead. In this case and others, you can take out a second VA loan with reduced entitlement.
What is entitlement?
Your entitlement refers to the amount of money the VA would pay your lender should you no longer be able to pay back your loan. You can either have full entitlement or reduced entitlement.
Full entitlement
Full entitlement is essentially a guarantee from the VA that it will cover a portion of your debt if you can no longer pay back your loan. It refers to the maximum amount of money the VA will pay your lender should you default. If it is your first time using a VA loan, you have full entitlement.
Here’s how full entitlement works:
- Let’s say you purchase a house at $144,000 or below, but then default your loan. In this instance, the VA will pay up to $36,000 to your lender.
- For properties above $144,000, the VA guarantees up to 25% of the home’s value to the lender.
If it is not your first time using a VA loan, you will have reduced entitlement until you restore your full entitlement through paying off your previous loan or selling your property.
Reduced entitlement
Reduced entitlement means the VA will guarantee less money to the lender than is typical for a first-time VA loan. There are a few instances in which you might have reduced entitlement. If you are currently paying off a VA loan or previously defaulted on a VA loan, you will have reduced entitlement.
Even if you have paid off a previous property, you will most likely have reduced entitlement until you apply to restore full entitlement.
Your reduced entitlement loan amount is based on the maximum Freddie Mac conforming loan limit in your area. In most areas, this is currently $548,250. This amount is then reduced by the amount of entitlement you’ve used.
The VA guarantees 25% of your home’s value. So, if you’re using 15% on your current property, you can have a reduced entitlement guaranteeing only up to 10% for your second loan.
How to restore full entitlement for a second loan
There are a few ways to restore full entitlement to take out a second loan.
Typically, you must sell your property, even if you have paid off your original VA loan to receive full entitlement on future VA loans. However, if you are having difficulty selling the property or wish to rent it out, there is a one-time option that allows you to restore full entitlement.
If for any reason you wish to retain your current property, you can either pay off the VA loan or refinance it into a conventional mortgage. You must then apply for a one-time full entitlement restoration through the Veterans Association.
Key Takeaway Entitlement refers to the amount of the home’s value the VA guarantees your lender if you default your loan. With full entitlement, this amount is 25% of the home’s value. You may take out a second loan with reduced entitlement.
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What is a VA loan?
A Veteran Affairs (VA) loan is a mortgage loan available to military service members, veterans, and their surviving spouses. Qualified individuals may use the loan to purchase a primary property. There is no limit to the number of times an eligible individual may take out a VA loan, but it must always be for a primary residence.
Who qualifies for a VA loan?
VA loans are for active service members, veterans, and even some spouses. You can check your eligibility on the
U.S. Department of Veteran Affairs website
.
Should I use a VA loan?
There is really no downside to using a VA loan. If you qualify, you should take advantage of the great benefits. VA loans come with low interest rates and no down payment requirements. You also won’t have to purchase private mortgage insurance, which is often a significant expense for homebuyers.
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