In order to know if you can reuse your VA benefit for a loan more than once, there are three things to understand. You need to figure out your VA entitlement, remaining entitlement, and how to go about restoring entitlement for purchasing with a VA Loan again or for multiple VA financed properties. I’ll break down each item below.
VA entitlement and your Certificate of Eligibility.
Your VA entitlement is based on your Certificate of Eligibility (COE). This entitlement determines how much you’re able to borrow with 100% financing. Full entitlement allows for financing up to your county limit for a single family home. Once you’ve used this entitlement, it doesn’t go away but remains used until you pay it back. Typically, this will be paid back once you’ve sold your home, paid off your loan, or refinance into a different mortgage product.
Depending on how much entitlement you used from your first VA Loan, you may be eligible to take out a second VA Loan while still owing on the first. For the initial VA Loan you took out, you were likely able to use the 100% financing benefit as long as you purchased within county limits. If you keep your purchase under $484,350, you’re eligible for 100% financing. This also means the entitlement available to eligible veterans is $113,275 (generally speaking). So, this will be the number to consider when you’re looking at a second VA Loan purchase. What was 25% of your original purchase?
Let’s walk through an example.
Original Purchase (100,000) x 0.25 = $25,000. The county limit was $484,350. This means you used $25,000 of your eligibility out of a total potential use of $113,275. Depending on your new purchase, the amount of eligibility you’ll have remaining can vary.
But let’s assume you purchase now for $200,000. The county limit is $484,350.
New Purchase (200,000) x 0.25 = $50,000. You’ve already used $25,000 of the $113,275. This leaves you with $88,275. In other words, for your new purchase of $200,000, you’ll be able to use your 100% financing VA Loan Benefit. In fact, you’ll still have some remaining should you ever need to use your VA Loan Benefits again.
Keep in mind - the VA still needs to approve the second VA Loan, and the new purchase needs to be for a primary residence (just like the first home purchase).
But I already sold my home. And my COE is showing I have nothing available.
Restoring your eligibility should happen automatically when your VA Loan is paid off. As stated earlier, the loan will be paid off when you sell your house or when you refinance your loan into anything other than a VA Loan. Occasionally, something will be lost in translation and the VA will not register that your VA Benefit has been refilled. Thankfully - this is easily remedied.
Remember the Certificate of Eligibility? It’s also known as Form 1880. That same form, which initially determines your eligibility and your VA Loan Benefit entitlement, is also the same form you’ll use to restore entitlement. Gotta love efficiency.
How to restore your entitlement.
First, you should read these instructions from the VA on how to restore entitlement.
As you can see, it’s super easy. Fill out the form, remind the VA that your previous VA Loan was paid off, they’ll verify this, and then restore your entitlement. Next thing you know, you’ll be out shopping with your brand new Approved Buyer Certification finding a new home!
The VA Loan benefit never expires as long as you have entitlement remaining or have paid off your previous VA Loan. You’ll be able to use it as many times as you’d like to transfer houses.
Do you still have questions about VA Loans or have questions about your specific scenario? Reach out to us via the chat below and one of our expert loan officers will get back to you promptly with an answer. You can always run your VA Loan numbers through our free VA Loan Calculator.
In addition, we recently published "The Complete Guide to VA Loans," which you can download for absolutely free! It will walk you through all the details about how documentation, benefits, getting approved, and closing on your VA Loan. Click the button below to get your free copy!