Using a VA loan to buy your first home doesn’t mean you’ve used up your home loan benefit for good. In fact, you can use a VA loan more than once. The Department of Veterans Affairs recently reminded borrowers that the VA home loan benefit is a lifetime benefit. Depending on your circumstances, you may even be able to purchase another primary residence while keeping your existing home financed with a VA-backed loan.
Understanding how VA loan entitlement works is an important first step in determining what’s possible. Whether you’re planning a move, considering a new primary residence while keeping your current home, or exploring your options after selling a previous property, here’s how remaining entitlement and entitlement restoration may affect your next purchase.
Can You Use a VA Loan More Than Once?
Yes. The VA home loan benefit is a lifetime benefit, not a one-time opportunity. Depending on your circumstances, you may be able to use it again after paying off a previous VA loan, or use remaining entitlement to purchase another home while your current VA loan is still active.
According to the Department of Veterans Affairs, some eligible borrowers can have two VA-backed home loans at the same time. This may be an option if you receive orders to a new duty station, relocate for work or need a larger home for your growing family.
However, using your benefit again isn’t automatic. You’ll need to meet VA eligibility and occupancy requirements, have sufficient entitlement available or restored, and qualify for the new mortgage based on your lender’s requirements.
What Is VA Loan Entitlement?
A VA loan entitlement is the amount the VA agrees to guarantee to a lender on your behalf. This guarantee helps lenders offer benefits such as no required down payment in many cases and no monthly mortgage insurance.
Your entitlement isn’t the same as the amount you can borrow. Your lender will still evaluate your income, credit, debts and overall financial situation to determine whether you qualify for a mortgage.
When you use a VA loan, some of your entitlement is tied to that loan until it’s eligible for restoration. How much entitlement remains can affect whether you can purchase another home with no down payment or may need to contribute some money toward the purchase.
Your Certificate of Eligibility (COE) is a useful starting point. It verifies your eligibility for the VA home loan benefit and provides information about entitlement already used. You can request a COE through the VA or ask your mortgage lender to help obtain it.
How Does Remaining VA Loan Entitlement Work?
If you still have an active VA loan, you may have remaining entitlement available for another purchase. The amount depends in part on how much entitlement you’ve already used and the applicable conforming loan limit for the county where you’re buying.
For example, imagine you purchased a home with a VA loan and later accepted a job in another city. You want to keep your current home and buy a new one to live in. If you have enough remaining entitlement to support the new loan, you may be able to do so without a down payment, provided you also meet your lender’s qualification requirements.
If your remaining entitlement isn’t sufficient to cover the required VA guaranty, a down payment may be necessary. A mortgage professional can review your COE, calculate the available entitlement and help you understand what may be required for your next purchase.
Keep in mind that buying another home means taking on additional expenses. Before moving forward, consider whether your budget can accommodate two mortgage payments, property taxes, insurance, maintenance and other costs associated with owning both properties.
When Can You Restore VA Loan Entitlement?
If you’ve used your VA loan benefit before, you may be able to restore the entitlement tied to your previous loan. In general, restoration may be available when:
- You sell your previous home and pay off the VA loan in full. You can then request restoration of the entitlement used for that purchase.
- Another eligible Veteran assumes your VA loan and substitutes their entitlement. This may allow your entitlement to be restored, subject to VA requirements.
- You pay off your VA loan but keep the home. The VA generally allows this type of restoration one time.
Restoring entitlement can make it possible to use your benefit for another purchase with full entitlement available. You must request restoration through the VA, and eligibility depends on the circumstances.
What About the VA Funding Fee?
Using your VA loan benefit again may affect the funding fee you pay at closing. For purchase loans, the fee generally varies based on factors such as whether it’s your first or subsequent use of the benefit and the size of your down payment.
Some borrowers are exempt, including eligible Veterans receiving VA compensation for a service-connected disability. The funding fee may be paid at closing or financed into the loan, if permitted. Your lender can help you understand how the fee may apply to your situation.
Explore Your Options for Your Next Home
Your first VA loan doesn’t have to be your last. Whether you’re planning to move, keep your current home or buy again after selling a previous property, understanding your entitlement can help you make a more informed decision.
Wondering what your next home purchase could look like?
Mutual of Omaha Mortgage can help you review your entitlement, understand your financing options and explore the possibilities. Let’s talk about what’s next for you.
