How many times can a Veteran use the VA home loan benefit? A California Veteran’s home loan benefits with the VA program is an often
misunderstood concept. Many think that their entitlement is a one and done deal or expires after a certain time period. This is not true. A veteran’s VA home loan entitlement is a lifelong benefit and can be used many times.
How Does the VA Home Loan Entitlement Work?
With a VA loan, the entitlement is an amount that VA guarantees will be repaid to the lender if the veteran defaults. The basic VA entitlement for eligible veterans is $36,000 which means the loan amount would be $144,000. However in many places throughout California and the rest of the country, the VA loan limit is $453,100 or higher. Higher property values and higher loan limits have given rise to a secondary, or “bonus” entitlement for VA loans. For example if the loan amount is $453,100 then the VA would be guaranteeing $113,275. The VA guarantee’s the lower of 25% of the county loan limit or 25% of the loan amount.
If a veteran’s VA loan takes up their full entitlement, then as soon as the veteran pays off their loan they are able to fully restore their loan entitlement so they can use the program again. If their VA loan doesn’t take up their full loan entitlement then they have the possibility to get a second VA loan. In some cases a California Veteran may even be able to purchase a new primary home with no down payment, depending on how much of their entitlement is used on the first loan and how much entitlement is needed for 100% financing on the new loan. (To find out if it is possible to get a second VA loan without paying off your current VA loan, talk to a California VA loan expert.)
Scenario Where a Veteran Would Use a VA Loan Multiple Times
Let’s say an unmarried Veteran buys his first home, a one bedroom VA approved condo in Orange County, at the age of 25. Later, he gets married and soon has his first child. Having outgrown their one bedroom condo, they find a nice three bedroom detached home. They are able to sell the condo and concurrently purchase the new home. (meaning they close escrow on the sale of the condo at the same time, or within a day or two, of closing on the new purchase.) The lender is able to get the Veterans VA loan entitlement restored quickly through VA once the closing statement on the sale of the condo is available. Several years later, and a few more kids in the household, it becomes a little crowded once again. Once again they are able to do a concurrent closing on the sale of their 3 bedroom home while purchasing a nice $600,000 home in Orange County with no down payment. And of course, in high cost counties like Orange and Los Angeles counties, our Veteran may even take advantage of a Jumbo VA loan and buy a home for $800,000, $900,000, or more.
The VA loan is a major benefit to California veterans. It makes purchasing a home for our veterans much easier and there is no limit to how many times the VA mortgage program can be used.
Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loan. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. www.OrangeCountyVALoans.com. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.