Can You Get More Than One VA Home Loan

By Ann Johnson

The Department of Veterans Affairs does not fund VA loans; they guarantee the loans. By guaranteeing the loan, it makes the loan less risky for the lender. If you are a qualified applicant, it is possible to obtain more than one VA loan in your lifetime.

Those who may qualify for a VA loan include U.S. veterans, unmarried spouses of veterans killed during or because of a service injury, and spouses of military missing in action. VA loans are for properties the borrower occupies. Lender policies and the borrower's qualifications determine loan limits, yet the VA limits the amount it guarantees. VA limits vary according to location and are subject to change.

When issuing a home loan, the lender wants the borrower to contribute to the purchase, making the lender's investment less risky. In some loans, the lender requires the buyer to purchase private mortgage insurance (PMI) if the borrower puts in less than a 20 percent down payment. The PMI guarantees the unpaid portion of the 20 percent down payment, should the buyer default. Instead of purchasing PMI, the VA loan guarantees 25 percent of the allowable loan amount. Therefore, there is no PMI in a VA loan. This allows some VA borrowers to purchase a home without a down payment.

The "veteran's entitlement" is the portion of the loan guaranteed by the Department of Veterans Affairs. This is 25 percent of the maximum loan amount allowed. If the borrower wants to purchase a home over the maximum loan amount allowed, the borrower must come in with additional cash. After the borrower pays off the loan, the veteran's entitlement reinstates.

If the borrower pays off the loan and sells the property, he is typically eligible to apply for another VA loan. A qualifying borrower can use the benefits as many times as he chooses, providing he first repays the loan and sells the property. Yet, there is a one-time exception, which allows the borrower to use the benefits for a purchase while retaining ownership of property purchased with a VA loan, providing the loan is re-paid. The borrower can own just two properties purchased with the VA loan. This involves a process called restoration of eligibility.

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