The unofficial slogan of VA Home Loan Centers is “if you are up to date on your payments, following a short sale, we will get you in a home tomorrow.” Under many circumstances, following a bankruptcy, foreclosure or short sale, a military member may qualify for a second VA loan. Veterans can use their home loan entitlements as many times as they want, as long as prior VA loans have been paid off, or if a veterans’ entitlement is still available. The VA entitlements are restored when prior VA loans are paid in full.
Beyond qualifying for a VA loan after previously using a VA loan, a prominent misconception exists regarding multiple loan uses at the same time, VA Home Loan Centers is constantly asked “Can I have two VA Loans?” The answer to this question varies depending on the situation, the amount of entitlement and the loan amount.
Typical examples for an eligible applicant to receive a second VA loan in conjunction with the first include relocation to a new area as a result of Permanent Change of Station orders, upsizing or downsizing and essentially any factors resulting in a change of circumstance. If the individual wants to retain their home while purchasing a second home in the area of their new duty station, a possibility exists. For this to happen however, the individual must have a remaining entitlement amount following the usage of their first VA loan.
There are two types of entitlements – basic and the bonus entitlement. The basic VA entitlement is $36,000. Every eligible veteran also receives a “bonus” entitlement that amounts too much more than the basic. The bonus entitlement kicks in for VA loan amounts over $144,000.00. Essentially the entitlements can be used for any loan amount without a cap. There is however, a limit on the amount the VA will guarantee. This is based off the VA county limits. If your county limit is $300,000 than the VA will only guarantee a loan for $300,000 and nothing more. Both entitlements can be used in combination with each other.
If a veteran has qualified for a loan amounting to $144,000 then the veterans’ bonus entitlement is still available. The only issue is that the VA loan is only for owner occupied properties, which means you can’t have more than one VA loan in the same city.
An important to understand aspect of the VA loan is the distinction between the loan limit and the amount the VA will guarantee the lender. The basic entitlement for VA loans is $36,000; this means that lenders are able to recoup losses of up to that sum in the event of a borrower default. Lenders often are comfortable loaning up to four times the available entitlement to a veteran, while requiring that a combination of the entitlement guaranty and any added down payment equal 25 percent of the value or sales price of the property (whichever figure is smaller) .
The bonus entitlement is the hypothetical amount that an applicant could use on the purchase of a second home. This entitlement of $144,000 or more is available to borrowers who are purchasing a primary residence for a substantially higher amount than the basic entitlement covers. To qualify for this entitlement the individual is required to dwell in the purchased property upon the closing of the loan, meet credit, income and debt to income ratio standards.
To apply for a VA home loan today contact VA Home Loan Centers!