Bonus Entitlement for ARMY | NAVY | AIR FORCE | MARINES | COAST GUARD | NATIONAL GUARD | RESERVES | SURVIVING SPOUSE
Yes, it is possible to have a VA loan on one property and use another VA loan to purchase a new primary residence. It seems that many active military, Veterans, Realtors, and mortgage lenders are not even aware of this. Having 2 VA mortgage loans at once is called accessing the 2nd Tier or Bonus Entitlement. Team Move loan officers and processors are experts at helping purchase another home using your VA eligibility. Let’s explore how this works!
Details of 2nd Tier / Bonus Entitlement on VA mortgage loans:
- Up to 100% financing available on the new VA loan
- Can rent out the other home and relocate to new house
- Requires a good explanation letter from the borrower. The letter should provide an acceptable reason to purchase another home
- Not intended for purchasing another home in the same neighborhood or city generally. But there are exceptions.
- $144,000 required minimum loan amount for 2nd VA loan
Example how to calculate 2nd Tier or Bonus Entitlement for a new purchase:
Eligible Veterans have a primary entitlement of $36,000 and an additional, secondary entitlement of $68,250
The following example assumes a $424,100 county limit and $36,000 entitlement used already on existing VA loan. This shows the buyer can finance with no money down between $144,000 and $280,100.
Calculations for a sample access to a second VA loan:
$424,100 x 25% = $106,025 Maximum Guaranty
$106,025 – $36,000 = $70,025 Entitlement Available
$70,025 x 4 = $280,100 Maximum Loan Amount with No Down Payment
So this sample Veteran may borrow up to $280,100 to purchase a new home. But the new home must be at least $144,000 to access the 2nd tier as well. Now, this buyer may purchase a more expensive house but once over $280,100, a down payment would be required. But the down payment on VA is still often a lower percentage than other loans.
Refinance a VA Loan on a Rental Property
Just so you know, it is possible to refinance a VA loan on a rental property! So if the rental property refinance is beneficial to the borrower, a VA IRRRL could be used. The VA IRRRL doesn’t even require an appraisal. Therefore it is always important to review any current VA mortgage when buying another home.