VA Loans and the Second Home

Takeaways

• A VA loan guarantee can used more than once.
• VA home loans don’t require mortgage insurance.
• The funding fee on the loan is higher than for a first-time VA loan, but is still very reasonable.

Did you know?

It’s possible to restore eligibility on a one-time basis even if you keep the property bought with your first VA loan.

Did you know it’s possible to use your VA loan benefits to buy a second home? To do so your original VA loan must be paid off and the second home bought with a VA loan has to become your primary residence. Remember the definition of primary residence is the home you live in most of the year. As long you occupy your second home six months of the year or more, the second home will be considered your primary residence. Typically you must dispose of the property bought with the first VA loan, but eligibility can be restored on a one-time basis for a new VA loan while you still own the real estate from the original loan.

No Money Down

The fact you can use a VA loan guarantee more than once is not widely understood. Once the original VA loan is fully paid off, or if another eligible veteran assumes your active loan and trades their available eligibility for yours, you are free to pursue a new VA loan. VA loans offer significant advantages over traditional loans. A VA loan mortgage is guaranteed with no money down for up to $417,000, and even if the loan-to-value ratio is 100% no monthly mortgage insurance is required.

The required funding fee for second VA loans is a little higher than for a first-time loan, but it is still reasonable. Members of the regular military pay a 3.3% fee with no down payment, up to a 10% down payment requires a 1.75% fee and more than 10% down requires a 1.5% fee. Reserve and National Guard veterans pay an additional 0.25% for second VA loans with a down payment.

If you qualify, a second VA loan is a great way to finance your second home purchase.