If you serve in the military or are a veteran, a Veterans Affairs loan can help you unlock the door to your dream home. But how many times can you use a VA loan? Borrowers who have earned this benefit can use it as many times as they want for life, as long as they qualify.
Eligible active-duty service members, veterans and surviving spouses can use this loan each time they purchase a primary residence, or the main home they live in. The catch: You may have to sell your VA-financed home before you can use a VA loan to buy another home.
Here’s more about reusing your VA loan benefits.
[Read: Best VA Loans.]
What Are VA Loans?
VA loans are issued by private lenders but guaranteed by the Department of Veterans Affairs.
Compared with conventional loans, VA loans feature more attractive terms, such as lower fees and other costs, because of the VA guarantee. The guarantee reduces lender risk.
One hallmark feature of VA loans is that down payments are typically not required. “The VA loan program is one of the best available for eligible homebuyers,” says Kevin Parker, vice president of field mortgage originations at Navy Federal Credit Union.
The program had major rule changes take effect in 2020, making homebuying even easier for those who have earned this benefit.
How Many Times Can You Use a VA Loan?
A VA loan is not a one-time deal. “There is no limitation on how many times you can use a VA loan,” says Summer Kim-Davis, founder and CEO of IKON Mortgage, a Dallas-based mortgage broker.
If you qualify, you can use VA loans throughout your lifetime, no matter how many primary homes you buy. But there are rules to keep in mind.
For starters, you can only use a VA loan to purchase or refinance your main residence, Parker says. “This generally means borrowers cannot use a VA loan to finance the purchase of a rental or investment property,” he says.
In some cases, you can qualify for a VA loan even if you do not sell your primary home. Eligible borrowers who have paid off and will keep the home they bought with their VA loan can apply to restore their full VA loan benefit.
The VA says this strategy can be used when:
— You purchased a home with a VA loan and have paid off the loan.
— Or you purchased a home with a VA loan and refinanced the mortgage to a non-VA loan.
[Read: Best Mortgage Lenders]
How Many VA Loans Can You Have?
Although you can reuse your VA loan benefit over and over, it is generally for one loan at a time. But you can use a partial entitlement for a second loan.
The VA guarantees up to 25% of the loan amount without a down payment for eligible service members. That means the VA pledges to repay the lender up to 25% of the purchase price of your home if you default.
If you’ve used your entitlement but have not fully paid back the loan, you still have a partial entitlement.
A partial entitlement provides the same 25% guarantee with a caveat. You cannot borrow more than the Freddie Mac conforming loan limit, reduced by the amount of entitlement you have not yet restored. The 2024 Freddie Mac conforming loan limit is $766,550 for most U.S. counties.
Say you bought a home for $300,000 and used your full 25% entitlement of $75,000. Because you used all of your entitlement, you couldn’t take a partial entitlement for a new loan.
But if you bought a $300,000 home and used 12% of your entitlement, or $36,000, you could still apply 13%, or $39,000, toward a new $300,000 loan.
[Read: Best Mortgage Refinance Lenders.]
Should You Use a VA Loan?
If you can get a VA loan, should you? Although VA loans can only be used for a primary residence, they make sense for many borrowers, Parker says.
“There are no real disadvantages associated with VA loans,” he says. “In most cases, they are an eligible borrower’s best option.”
VA loans often make the most sense for borrowers, agrees Kim-Davis. “All VA veterans should take advantage of VA loans whenever they purchase a home with less than a 20% down payment,” she says.
Choosing a VA loan in such cases means you won’t have to purchase private mortgage insurance. That adds up to big savings: PMI can cost between 0.5% and 2% of the loan amount each year.
Still, a conventional loan may be a better choice if you are buying a home that costs more than the VA loan limit or you have great credit, Kim-Davis says. “It may be wise to compare different loan options — including VA and other conventional loans — to find the right loan products,” she says.
Consult a mortgage lender to weigh your options, Parker advises. “There are few instances when another type of loan would be a more suitable option for a borrower,” he says, adding that “the perks and benefits VA loans provide are hard to beat.”
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How Many Times Can You Use a VA Loan? originally appeared on usnews.com
Update 04/04/24: This story was previously published at an earlier date and has been updated with new information.
