Married Military Couples have great opportunities in using VA home loans!
For married couples, discussing VA entitlement with a trained Team Move VA Home Loan Expert is key to understanding your cost saving opportunities.
When a married couple are both in the military and/or Veterans, there are some great strategies for VA loans. This can lower the loan costs, remove loan size restrictions, and even overcome a previous foreclosure. The key thing to remember is to explore all options available for both VA eligible borrowers. Today we answer popular questions relating to choosing which borrower’s eligibility to use.
Married Military Couples, one Veteran has used the full entitlement:
Let’s say that Service Member A has an existing VA home loan and that loan will not be satisfied prior to the closing of the new home purchase and both borrowers are not exempt from the funding fee. Whether this is because the couple will rent out the home that has the existing VA loan or they will be selling it after the new purchase, there are choices. The first option, which will cost more than the first time use, is Service Member A could use his/her bonus entitlement to purchase a home of $144,000 or more and the funding fee will be 3.3% (the first time use would have been 2.15 or 2.4%). There are two reasons though to use Service Member B’s entitlement for saving money and having more purchase options. The first is the VA funding fee would only be 2.15 or 2.4% assuming that this would be Service Member B’s first time use of a VA home loan. The second is since this borrower doesn’t have an existing home loan, there are no limitations on the loan size like there is when using bonus or 2nd tier entitlement.
Married Military Couples, one Veteran has a VA foreclosure which ties up the basic entitlement:
There are several reasons in this case to use the spouse’s entitlement that doesn’t have the foreclosure. This example assumes both borrowers are not exempt from the VA funding fee.
- The Veteran with the foreclosure will probably have a lower credit score which could affect the interest on the new VA loan
- The Veteran with the foreclosure would have to use his/her bonus entitlement since part or all of the basic entitlement would be tied up from the foreclosure. This could put loan size limits on the new purchase
- The Veteran that doesn’t have the foreclosure should qualify easier for a mortgage and would have a lower VA funding fee (assuming it is a first time use) of 2.15 – 2.4% compared to 3.3%
Married Military Couples, Both have never used their VA entitlement and one Veteran is considered 10% or more disabled by VA
In this scenario, both borrowers would have no restrictions to loan amounts since there are no existing VA home loans, but there is a big cost savings if the disabled Veteran’s entitlement is used. Using the entitlement of the disabled Veteran is beneficial because this borrower will be exempt from the VA funding fee. This saves 2.15 – 2.4% in this example, depending if the borrower was regular military, National Guard, or Reserves.
Married Military Couples: What if the married couple want to own two primary residences?
This doesn’t happen often but sometimes married service members are stationed at different bases or have other reasons to hold separate households at least part of the year. Let’s say that one borrower is a Marine stationed in Camp Lejeune and the other is stationed at Fort Bragg. The Marine could use the VA entitlement to purchase a primary residence for the Marine and the family, while the borrower in the Army would occupy a home in Fayetteville. This way each of the service members have a home within a short commute to their bases and the family can visit the other houses throughout the year.
Married Military Couples may own up to 4 properties with VA mortgages.
Do you want to buy homes with no money down and build a real estate investment portfolio over the years? Yes, married service members where both have VA entitlement, can have up to 4 VA home loans!
First of all, VA home loans are only for the purpose of buying a primary residence and it is important that a buyer does not commit loan fraud by using a VA loan for no money down and immediately rent it out. The borrower that will satisfy the occupancy requirement must occupy the house within 60 days of closing and it must be the intent of the buyers to occupy the home as a principal residence. But transfers happen, wants change, and opportunities happen in life. So technically, both Veterans could have the following scenario take place:
- Service Member A owns a property with a VA loan that has been a rental for years
- Service Member B owns a property with a VA loan that has been a rental for years
- Service Member A has another VA loan on the couple’s current residence
- Service Member B will now use his/her bonus entitlement to purchase a new primary residence while the current residence will be rented out
What if Married Military Couples each have some remaining entitlement available?
When married couples have used their entitlement and each have some remaining, they can combine their remaining entitlement to purchase another home.
What if two Veterans are not married and they do not make enough money to qualify on their own?
So when two Veterans or Service Members want to buy a home together and they are not married, they can do a Dual Vet VA Home Loan. There are some rules lenders have to go by in this scenario, but it can be a great way for unmarried couples to purchase a home. Here are the details:
- Maximum combined debt ratio is 43%
- After we have underwritten the file, it must be sent to VA for their approval
- The VA loan amount worksheet will need to be used to calculate the maximum loan amount and down payment if applicable
As you can tell there are many ways where a VA home loan can be used to purchase a home and having a loan officer experienced in these scenarios will help you make the right choice for you.
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.