Can I Get a VA Loan on a Second Mortgage

By Kristine Tucker

A qualified veteran who already has a Veterans Affairs (VA) secured primary mortgage is eligible to obtain a VA loan for a second mortgage. According to the Veteran's Lending Guide, this secondary type of borrowing requires that the applicant's first and second mortgages both be secured by the same property.

A veteran is eligible to receive a VA funded second mortgage as long as the second mortgage is secondary to the primary mortgage. According to the U.S. Department of Veteran affairs, a qualifying second mortgage is described as the "junior lien position relative to the original VA loan." Once a primary VA guaranteed loan is established on the property, a qualifying second mortgage is obtained.

VA guidelines permit interest rates on a second mortgage to be higher than those on the initial primary VA loan. However, interest rates on a second mortgage cannot exceed industry standards. Since real estate markets and interest rates are somewhat volatile, it is best to contact a mortgage lender, bank, or real estate loan originator to discuss current real-time industry standards.

The VA will not approve a second mortgage loan application if the second mortgage is unassumable. VA guidelines allow a VA-funded home to be sold or assumed by a qualified buyer who has an acceptable credit history. Second mortgages must have available assumability rights with no restrictions or limitations.

A VA-guaranteed second mortgage is available only on properties that have an original primary VA loan on the exact same property. Second homes, investment properties and commercial properties are not VA-funded, so it is not possible to obtain a VA second mortgage on those real estate investments.

http://www.lenderva.com