If you have used a VA loan before, you know what significant advantages they offer. To name a few, these loans don’t require down payments; they allow cash-out refinances, low-interest rates, and no mortgage insurance.
But the most common question the borrowers have who have already purchased a home using a VA loan is if they are limited on the number of times they can use it or use it as many times as they like.
In this blog, Florida mortgage company will try to answer this question and look at what VA entitlement is and how it affects the number of times a VA loan may be used to buy a home in Florida.
How many times can you use a VA Home loan?
Qualifying veterans, active-duty officers, and surviving spouses have no limit on the number of times they can use Florida VA loans in their lifetime. As long as you have the required eligibility of a VA loan and your mortgage lenders, you can buy a home or refinance your existing VA loan as many times as you like during your life. In some situations, you may even qualify for more than one VA home loan at a time.
However, remember that a VA loan must be either for buying or refinancing your primary residence. You won’t be able to use a VA loan if you aren’t going to live in the property or use it to buy a vacation home.
What is VA entitlement?
Every veteran or service member who meets the essential eligibility criteria of a VA loan gets a particular entitlement. It refers to a specific amount that the Department of Veteran Affairs will repay to the mortgage lenders of a VA loan in Florida if the borrower defaults on the loan.
Veterans generally enjoy two kinds of entitlement.
Full Entitlement
If you are using a VA loan for the first time to buy a house or you have fully paid off your previous VA loan, then you are eligible for a total entitlement of $36000. Since there is no limit on the number of times you can use a VA loan, each time, you will be eligible for full entitlement once you pay your previous loan.
Partial Entitlement
If you already have some amount remaining of your entitlement on a previous VA loan, then you may not be eligible for full entitlement. In this case, the remaining amount of your entitlement will be combined with a new amount, which is called partial entitlement. Simply put, VA will pay a certain percentage to the Florida mortgage lenders against your current debt if you default on the loan.
If you have a partial entitlement, the VA will pay up to 50 percent of your entitlement. For example, suppose you have previously purchased a home and assume that you still have $9000 of your entitlement in hand when you apply for another VA loan to refinance your current property. In that case, VA will pay only $4500 (50% of $9000) towards your current debt if you default on the loan. However, you can still borrow more than your entitlement, but lenders may require a down payment.
How to get a second VA loan?
Are you looking to get a second VA loan but not getting approval from PCS for having two properties? Or do you want to refinance your current home and use some of the remaining entitlement for a lower rate loan account in an account of having a second property?
To apply for a second VA loan, you must be able to prove why you need a second home. Although there is no hard and fast rule, lenders may require you to provide one or two of the following proofs.
- You need a separate rental property for earning an income.
- You are planning to move in with your parents, and it would be more convenient for you if they stayed close by
- Your spouse is transferred to another station, which will affect your family’s living conditions if you don’t plan early.
- You want to buy a second home for your kids studying in another city.
Below are a few ways you can get a second Florida VA loan.
- Pay off your existing property with the amount of entitlement you have. If your current property is not fully paid yet, use part of your partial entitlement to pay off the loan on your existing home.
- Refinance to a non-VA loan if you want to keep a property as a second home or a rental property. This will help you to free up some of your entitlement.
- Use up all of your entitlement on the current home and then apply for a second VA loan to buy another property or refinance your current one.
- Wait two years after a foreclosure, short sale, or deed in lieu (if your current property has been sold to the lender for less than its original value) before applying again for another loan. You will also need to show that you have paid off all debts incurred during these two years and can explain why you went through this ordeal.
The VA is very flexible when it comes to allowing multiple properties, especially when paying off your current loans. The only thing that VA doesn’t allow is to have two homes with a loan. If you still want or need a second property, then remember that you will have to come up with the down payment for it, and this may be challenging if you plan on using just your entitlement as a down payment.
Calculating your Entitlement
If you are new to the VA home loan program, it is better to understand how entitlement affects your VA loan. It is best to consult with the Florida mortgage lenders when trying to figure out how much entitlement you have. You can also use several online calculators, which will give you the idea of how much you will receive as an entitlement and compare what kind of loan interest rate and monthly payments you can expect with different loan amounts.
Read here to learn how to get pre-approvals on VA loans.
Bottom Line
VA loan is an excellent program for those who have served the nation. VA loans are a great option if you want to use your entitlement and still save some amount for later use. However, it is not a good idea to have two homes with a VA loan since this will cost more money in interest charges, but as long as you follow the rules, you can keep applying for multiple loans with a Florida mortgage company till you fulfill all your dreams.
