> What is entitlement?
Every veteran and active service member who meets the VA's eligibility requirements has something called entitlement. Entitlement can be a bit confusing, even for those working in the mortgage industry, but the most common definition is that it’s a specific amount the VA pledges to repay to a lender if the borrower defaults on the loan. This is part of the VA Loan guaranty.
Eligible veterans in most parts of the country have a primary entitlement of $36,000 and a secondary entitlement of $68,250, which is used when a veteran purchases a home for more than $144,000.
There are can be higher entitlement amounts in more expensive areas. When a qualified borrower purchases a home through the VA loan program, they are using some or all of their entitlement. The VA typically guaranties a quarter of the loan amount, so borrowers will typically utilize a quarter of their entitlement when purchasing.
Referral link:- http://vastreamlinemortgage.net/types-of-va-home-loans/
Surprising to many is that the possibility of using multiple VA loans at once does, in fact, exist. Qualifying for a second loan in conjunction with the first is contingent upon the service members remaining entitlement and their unique situation.
Military members are allotted two forms of entitlement, basic and bonus. The basic entitlement amount is $36,000 while the bonus entitlement is for $144,000; it is permissible to use both entitlements in connection with each other. Essentially, if the previous home purchase did not drain the borrower of the entirety of their entitlement, they may use the remainder for a second home purchase. Furthermore, when the borrower pays back the original loan, the entitlement is restored.
Aside from the remaining entitlement requirement, a borrower must also demonstrate that purchasing a second home provides a net tangible benefit.
Reference Link:- http://valoanguidelines.org/refinance-loan-programs/
Best of luck!
Nelene Gibbs, Realtor, e-Pro
If the second home is going to be your primary home and you qualify for a VA loan, then what you are planning sounds reasonable. But, you need to get with good loan officer who will investigate more programs that might suit your needs as well, based on the timing of your purchase and your current circumstances. We've bought homes where we've used my Husband's VA benefits and we've purchased homes where we have not.
The website below is a good resource for finding lenders who work in a myriad of loan programs.
To qualify for a VA loan, the home that you're buying has to be your primary residence. Yes you can get a VA loan, but under VA guidelines, you cannot own another property. Since you want to rent your first home, you would be considered an 'investor'.
If you really want to buy a new home using a VA loan you will need to sell your first home. I can provide you with a free market analysis of your home, that way you know how much you can sell it for.
Another option would be to re-finance your current home using a VA loan. That way, you'll be saving money on your mortgage payment.
Feel free to contact me directly for more information at 281-380-5589.
We appreciate your service to the United States of America!
Amber Carrillo, Broker/Owner