![]() This amount jumps up to $272,325 when your second home is located in a high-cost county. You can currently access a total entitlement of $181,550 to own two homes in most of the country. This gives VA homeowners the option to retain ownership of their current property, possibly to rent it out as an investment property, while buying a new primary residence for themselves. The VA’s second-tier entitlement makes it possible for qualified borrowers to keep a home they already own and buy another. There's a big caveat here worth noting: If you obtain the one-time restoration and then later want to seek another VA loan, you'll have to sell every property you obtained with a VA loan in order to restore your entitlement. At that point, if you're planning to hold onto the home rather than sell it, you could look to apply for the one-time restoration of entitlement to purchase again using your full VA loan entitlement. Refinancing pays off the original loan in full. You can’t take advantage of this if you’re still making mortgage payments on the property.įor example, let's say you buy a home with a VA loan and then refinance into a conventional mortgage. The original VA loan would need to be paid in full to pursue the one-time restoration. This benefit allows veterans to retain an investment property or a second home and purchase again using the full reach of their entitlement. The VA gives borrowers a one-time opportunity to fully restore their entitlement without selling or otherwise disposing of their home. If you’re purchasing in one of the VA’s high-cost counties, you’ll have more entitlement at your disposal. You’d also wind up paying for mortgage insurance with a conventional loan. Our example with a $18,450 down payment on a $500,000 loan represents a 3.7 percent down payment. That could still be a great deal compared to conventional financing, which requires a minimum 5 percent down payment. You could certainly aim for a bigger loan, but buyers who purchase above where their entitlement caps out must put down 25 percent of the difference between their cap and the purchase price.įor this example $500,000 purchase, you would need to come up with about $18,450 for a down payment because of your reduced VA loan entitlement. That $426,200 figure represents how much you could look to borrow before factoring in a down payment. counties in 2023 is $726,200, which means the full entitlement would be $181,550 ($726,200 x 25%, because the VA guarantees a quarter of the loan). ![]() You want to hold onto and rent out your current home and buy a $500,000 home in an area with the standard county loan limit.Īs a refresher, the loan limit for most U.S. We’ll say you purchased a home a few years ago for $300,000 utilizing $75,000 ($300,000 x 25%) of entitlement in the process. Add those together and you get $181,550.īecause you’re keeping your home, the entitlement used to secure that original VA loan isn’t accessible for another purchase. For borrowers in most parts of the country, there’s an additional, second tier currently worth $145,550. There are two layers of entitlement, a basic and a bonus, or secondary, level. 10.3 VA Interest Rate Reduction Refinance Loans (IRRRL).10.1 Restoring Your VA Loan Entitlement.10 Reusing Your VA Loan Benefits Close Section. ![]()
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