Introduction VA home loan program is offered by the United States Department of Veterans Affairs which enables the qualified veterans, active-duty military members, eligible surviving spouses, certain reservists, and National Guard members to purchase a home without any down payment or private mortgage insurance. The use of VA loans is common today due to the benefits that they have over the conventional loans for purchase of homes. One question is if a borrower can have two VA loans simultaneously, by getting a second such loan when the first one is still being paid off. About the question, there are several factors that can influence the answer.
The Basic Eligibility Rule In general, guidelines of VA require that one should not have more than one VA loan at any given period in time. This policy’s intent is to stop veterans from getting a number of no down payment loans and then being in a position to default on the loans. Therefore, if you currently own a VA mortgage, you often cannot secure another one until the prior loan is fully repaid and the account is shut down. The simplest way to look at VA guidelines is the basic one-loan-at-a-time eligibility rule.
The 90-Day Window Exception However, there is one very important exception. If you have closed a previous VA loan and you wish to get a new one, then you do not have to wait until closing the first loan out. However, most lenders will not have a problem with you applying for another VA loan so long as you have plans of paying off the first loan and completing the process within 90 days. This 90-day window gives the borrower some leeway in the sense that they can buy another home before they finish paying off the old loan.
Specific Scenarios To further clarify whether and when you can have two active VA loans, let's walk through some specific home purchase scenarios:To further clarify whether and when you can have two active VA loans, let's walk through some specific home purchase scenarios:
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You have an existing VA mortgage and want to move: One important thing to note is that you cannot qualify for a second VA loan. The first home can only be sold or one has to change into a conventional loan before being eligible for a VA loan. The exceptions are if you are planning to sell the first home within 90 days or if your lender confirms the first loan would be paid off within the next 90 days.
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You paid off your old VA loan last month: You are allowed to for another VA loan for a new home because the previous loan has been paid in full and closed. In this case, there is no waiting period.
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You have a non-VA conventional loan and want a VA loan: Since you do not possess an existing VA loan, it means that you have the opportunity to get a first-time VA loan to either refinance the conventional loan or even purchase another property.
- You have a VA loan on your primary residence and want one for a rental property or second home: In the case of VA loans, the loans can only be used to finance the veteran’s primary residence only. Hence you cannot have two loans at the same time for two different homes.
In the scenarios outlined above as number one and four, it is explicitly forbidden to get two VA loans that overlap. The only option is either to pay off the first VA loan or to refinance into a non-VA loan. If you have paid off a previous VA loan in full or intend to do so within 90 days, scenario two shows you can receive VA loan approval the same day as per the one-loan rule exemption.
Other Considerations A couple final points to mention in response to whether you can have two VA home loans:A couple final points to mention in response to whether you can have two VA home loans:
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Charges such as interest rates and closing costs are said to be affected when one rushes to seek two successive loans within months. Yes, it does but it largely depends on your financial and credit status, though it is good to know.
- If approved with the 90-day overlapping loan exception, the monthly cost of the mortgage payment will likely be higher until selling or paying off the previous loan as intended. During the transition period, ensure that your income and your budget can cope with the double payment.
The one-VA-loan-at-a-time rule shields you from stretching yourself too thin, but the 90-day exception provision does allow relatively seamless moving between two VA-funded homes under certain conditions. It may be worthwhile to talk to your lender to find out if this exception can help you proceed with home owning plans that may require the use of two VA loans within a short period of time to buy or sell property.
