Picture this scenario which happens more than you may think. A service member is being PSC’d to another duty station and wants to buy another home. Maybe even the Veteran just wants to buy a bigger house in another neighborhood. BUT, what if the current home can’t sell, so it needs to be rented? Or the owner just wants to rent out the home for investment purposes. Plus, the current home has a VA loan on it already. So the question is asked, “How many times can you use a VA loan?” or “Can I use VA again to buy a home and rent out my other home?”.
How Many Times Can You Use a VA Loan?
Actually it is possible to have a second VA loan. Actually, multiple VA loan situations happen right often. It is even possible to buy the new home with no money down, but there are requirements. Lenders will use a VA loan calculator to determine if a down payment is needed or not. There are several key factors to determine if one can have multiple VA loans at the same time.
First of all, these requirements do not apply if the current VA loan is paid off prior to the new VA loan. When the original VA loan is satisfied, then a second VA loan or even 10th VA loan is allowed. In these cases, then a new VA loan can take place on the same day as the sale. So these rules apply when a portion of the Veteran’s entitlement is tied up when buying the new home.
How to Get a Second VA Loan for Multiple VA Loans at Once
When part or all of a Veteran’s basic entitlement is tied up in an existing property, that’s when bonus entitlement comes into play. In order to determine this 2nd Tier entitlement availability, the following steps are typically followed.
- Loan Application & Credit Review
- Request Certificate of Eligibility
- VA Loan Calculation – Maximum VA Loan
- Discuss VA Loan Options
- Look for Homes Matching Approval
Since the down payment in these cases can vary, it is important to speak to an experienced VA loan officer first. In addition to discussing goals, the application is completed and credit is pulled. Assuming those steps look good, we will request the COE online through the Veterans Administration. We actually have a great article that thoroughly explains the Certificate of Eligibility. Next by using the entitlement connected to the other property and the price of the new home, the down payment is figured for the new purchase. This second VA loan calculation gives the loan officer what is needed to create a purchase plan.
Loan terms are discussed so the Veteran understands the prequalification so that the home buying process can start. To tweak the numbers, the price may be updated and the loan officer will fine tune this 2nd VA loan. Do keep in mind that the minimum loan size is $144,000 in having multiple VA loans.
Another popular question is “How many times can you use a VA loan after a foreclosure, short sale, or bankruptcy?”. Believe it or not, its even also possible to use VA 2nd tier entitlement after these events. It is even possible to purchase with no money down after a short sale.
Including Rental Income on Current Residence
So if you’re going to own two homes, how in the world are you going to qualify with 2 house payments? Well, unlike other loans that restrict new rental income, VA has rental benefits. We may allow for up to 100% of the rental income on a property converted from primary to rental home. The rental income may be used up to the total mortgage payment. For instance if rental income would be $1000 and the mortgage payment is $900, we could count $900. This would wash the mortgage payment and the result would be no additional debt to the Veteran!
Requirements to Count Rental Income. Must take place prior to final approval
In order to count rental income from converting a current residence into a rental, the following are required.
- Signed lease agreement
- Copy of first month’s rent or security deposit
- Proof of deposit into buyer’s bank account
Even though new rental income is allowed, make sure you are comfortable with rental home responsibilities. What if the tenant doesn’t pay, can you afford times like that? If the rental needs work, can you handle it?
So now you know the answer to how many times can you use a VA loan. Whether it is your first or 10th VA loan, trust us to help you get the keys to your new home!
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Team Move is a part of OVM Financial with locations growing throughout the eastern seaboard.
Author: Russell Smith
Team Move OVM Financial loan officer success is Russell’s primary focus. He provides the tools and techniques he used as a top producing loan officer. Additionally he offers the Team Move OVM Financial Agent Training Program. Sharing is so important to Russell so he works diligently to be a resource to loan originators and Realtors.