There are various myths and misconceptions concerning VA loans. The most popular are based on VA eligibility or the amount guaranteed by the VA in the event of a borrower failure. After all, your eligibility determines whether you can buy a property with no down payment. Read on as we discuss this and other information you may need regarding VA loans.
Qualification for VA Loans
Simply put, VA loan entitlement refers to the loan amount guaranteed by the VA. The Veterans entitlement is typically 25% of the loan amount, limiting the amount they can borrow. However, there are two levels of VA loan eligibility: primary and secondary. Following that, veterans can borrow without making a down payment up to the maximum amount that a lender is willing to lend. The majority of qualifying veterans are entitled to a $36,000 main payment and a $125,800 supplemental benefit. In total, $161,800 was paid.
Calculating Second-Tier Entitlement
A portion or all of your entitlement is tied to the loan with a VA loan. Because the VA guarantees a quarter of the loan, your entitlement is frequently equivalent to 25%. On a $200,000 loan, you will typically use $50,000 of your entitlement. A simple estimate ($161,800 – 50,000) shows that the majority of customers have around $111,800 left. Veterans and military personnel purchasing homes in higher-priced locations are now eligible for more VA loans. Maximum entitlement amounts, which have grown to $970,800 in high-cost locations, are connected to VA loan limits. Following a foreclosure or short sale, VA buyers may collect the remaining entitlement amount.
When Veterans May Be Eligible for Second-tier Benefits
Consider the following circumstances if you’re wondering when you might need a second VA mortgage.
- Buying and Keeping. Vets may be allowed to preserve their present house while using the remaining of their VA loan entitlement to buy a new primary dwelling. This typically necessitates second-tier qualification. In addition, depending on the remaining entitlement, buyers may be required to make a down payment.
- Purchasing After a VA Loan Default. Veterans may be able to refinance a VA loan following a foreclosure or short sale.
- VA Assumptions. While VA debts can be assumed, veterans’ rights continue to exist. The only way to protect your VA loan entitlement is for a Veteran to assume it on your behalf.
- PCS Orders. Permanent Change of Station (PCS) orders allow you to hold two VA mortgages at the same time.
Your VA Loan Experts at Mortgage City
Let it be known: You can get two VA loans to finance two different primary residences. This usually applies to active-duty service members who have been PCS’d. So, instead of selling your house, you might rent it out and use the remaining VA loan benefits to buy a new one. Many options could work, you just have to do things with guidance and within legal bounds. Thus, it is vital to consult an expert about the VA’s occupancy criteria and whether your situation allows you to use two VA loans at the same time.
This way, you could learn as you go without making rash or misguided decisions. Remember, this is your money, assets, and investment! If you want to learn more about VA mortgage rates, Mortgage City is here to assist you through the entire process professionally and practically. Call us today at (248) 930-8709!
