In recognition of those who have served our country, the Department of Veteran Affairs (VA) provides lifetime benefits for qualified veterans, active-duty personnel, reserve members, National Guard members, and some surviving spouses. As long as you restore your entitlement and qualify with a VA home loan lender each time, you can use your VA home loan benefits multiple times.
VA home loan entitlement
Rather than originating home loans, the Department of Veteran Affairs provides an entitlement to eligible individuals, which is a specific amount they guarantee to repay lenders if the homebuyer defaults on their loan.
You have full entitlement if you meet at least one of these requirements:
- You’ve never used your home loan benefit, or
- You’ve paid a previous VA loan in full and sold the property (in this case, you’d have your full entitlement restored), or
- You’ve used your home loan benefit, but had a foreclosure or compromise claim (also called a short sale) and repaid the VA in full.
While eligible veterans and active duty service members, and survivors with full entitlement no longer have limits on loans over $144,000, that doesn’t mean you can purchase a multi-million dollar home! Your mortgage lender still needs to approve you for the home loan, which means meeting their eligibility requirements. They’ll review your credit score, credit history, income, and assets. Most mortgage lenders set their own VA loan limits, which are usually in line with the Federal Housing Finance Agency (FHFA) or conforming loan limits for each county. Click here to check current conforming loan limits.
VA home loans don’t require a down payment, but you will likely pay a VA funding fee, which you can elect to roll into your VA home loan to pay off over your loan term. However,
To know whether you are eligible for a VA home loan and entitlement, you first must obtain a Certificate of Eligibility (COE). Click here to learn how to obtain a Certificate of Eligibility.
Homebuyers can choose to apply some or all of their entitlement to the loan when purchasing their home. If you would like to use your VA home loan benefits again but have used all your entitlement, you can restore your entitlement.
How to restore VA home loan entitlement
You have a couple of options if you decide to restore your entitlement. The first option is to sell your home and pay off your mortgage in full. Selling your existing home and using the funds to pay off the remaining balance of your loan will allow you to apply for another VA mortgage loan. After the property is paid off, you will need to notify the VA to update your Certificate of Eligibility.
The second option is to sell your first property to another qualified veteran or service member who will essentially take over your loan, and their entitlement will be transferred into your name. Your mortgage lender will need to approve the sale to ensure the buyer is qualified.
The third option is to keep your existing home and apply for a one-time Restoration of Entitlement through the Department of Veteran Affairs. If you have already paid off your first mortgage and want to keep your current property as a rental home or vacation home, you can apply for a one-time Restoration Of Entitlement.
Having more than one VA home loan at the same time
The VA allows eligible veterans to have more than one VA home loan at the same time in certain situations. A second VA home loan is commonly called a second-tier entitlement. Veterans can use a second-tier entitlement if they seek to keep their current home and purchase another primary residence with the remainder of their current entitlement. Depending on how much of your current entitlement you have remaining, you may need to put additional money down to make up the difference between the total amount of your VA entitlement and the total of both mortgage balances. Active duty members who receive Permanent Change of Station (PCS) orders may also qualify for a second-tier entitlement and have the opportunity to rent out their current home and purchase another home in their new location with their remaining entitlement.
VA home loans have lifelong benefits that help pave the way towards homeownership for those who have served our country. Discuss your plans with your VA mortgage lender to determine how to reuse your VA home loan benefits.