How Many Times Can I Use a VA Loan to Purchase a Home?
This is a great question, and one that we get very frequently. Often this question comes from borrowers who have purchased a home with their VA loan benefits and are looking to purchase another home, hopefully with a VA loan again. In cases like this, there are two factors to consider, and one factor that you may think be important, but actually is not, beyond its relation to one of the two factors that does matter. That probably sounded somewhat confusing, but we’ll go into it all in this post. The two factors that matter are the policy restraints that the VA has on multiple loan usage, and the practical restraints that can prevent a borrower from using their VA loan multiple times. The factor that surprisingly does not matter is whether you currently have a home financed with a VA loan (save that this scenario does introduce a significant practical restraint).
The first thing to consider is the restraints that the VA has on multiple VA loans. The VA does not have any policies in place that prohibit eligible borrowers from using the VA loan program multiple times for different properties. The biggest thing you’ll notice is that the VA charges a larger percentage of the loan amount for the Funding Fee on subsequent uses than on first-time uses. While it’s not significantly larger, it can come as an unpleasant surprise if you’re not aware of it beforehand. For a VA borrower using their VA loan benefits for the first-time, the funding fee is 2.15% unless the borrower makes at least a 5% down payment. On a subsequent use, the funding fee is 3.3% unless the borrower makes at least a 5%. Insider tip – for borrowers making at least a 5% down payment, the funding fee is the same for the first-time use as it is for subsequent. For a down payment of 5% or more, the funding fee is always 1.5%. For a down payment of 10% or more, the funding fee is only 1.25%.
The second, and far more restrictive, things to consider are the practical restraints to using your VA loan benefits multiple times. For the borrower selling their existing home and moving into a new one, the most obvious practical restraint is going to be savings and money sufficient to purchase a new home. For this reason, most veterans are going to be limited to buying a new home with the VA loan benefits every 4-6 years. Additionally, there’s the obvious restraints of finding a suitable home close to work and school and the trouble and expense of moving. For the borrower who still owns a home already financed with a VA loan, they’re going to run into a very large restraint in the form of a limit on how much entitlement you have available from the VA. The entitlement amount refers to how much the VA is willing to guarantee to the lender on your behalf in the event of a default.
For the most part, you’ll need to have at least 25% of the loan amount covered by either the VA guarantee or a down payment in order for a lender to be willing to issue you a VA loan. Since you only have a finite amount of entitlement available, you’ll only be able to have more than one home financed by a VA loan if the homes you are purchasing are relatively low-priced. As we hinted above, already owning a home with a VA loan does not, in and of itself, present a problem to using your VA loan benefits on another home. There is a limitation to this however – for a home that is financed with a VA loan but is no longer the borrower’s primary residence, the VA will not permit the borrower to get a cash-out refinance on the property. The only way to refinance a home you no longer live in is to use an IRRRL.
So, in summary, there’s no theoretical limit to how many times you can use your VA loan benefits – the VA, at least, does not place any restrictions on how many times you can use your VA benefits, only on the amount of entitlement a veteran is eligible for.