VA Loan to $4MM
What is a VA Loan?
A VA loan is designed to offer long-time financing for qualifying veterans. The US Department of Veterans Affairs guarantees a portion of the loan, enabling the lender to provide the veteran with more favorable terms. The veteran can check their eligibility status by requesting a certificate of eligibility. Please keep in mind that the veteran will also need to meet credit and income loan requirements to receive financing.
A VA Loan may be used for purchasing or refinancing your primary residence. Purchase your primary residence with upto 100% financing. Or refinance your existying VA for more favorable terms or cash-out. With all the value growth during the past few years, you can utilize equity in your home to make other investments, consolidate debt and make home improvements. If you like your current VA Loan terms, we can also provide a HELOC to achieve some of the same goals.
* The US Department of Veterans Affairs loans are subject to individual VA Entitlement amounts and eligibility, qualifying factors such as income and credit guidelines, and property limits.
Here are a few helpful VA resources that you may need:
“We built our Hawaii dream home with our local credit union, but they only offer ARMs, so we wanted permanent financing. Doug accessed my VA benefits and delivered a 30-year VA loan at a great rate. Now we enjoy our sunsets in style!”
“Douglas Mallardi made my home buying dream come true. I am an older first time buyer and Doug led me through the process explaining each move to be made. Though the process of a VA mortgage seemed daunting Douglas made it easy for me. He is extremely knowledgeable and got the job done. I respect how efficient he is and his availability to me was outstanding.”
Big Island Mortgages by Doug Mallardi
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Can a VA loan be used for a second home?
You cannot use a VA loan for second home purchases, but you can use it for a second primary residence. In mortgage lending, the term “second home” typically refers to a vacation home, like a beach getaway. A VA loan cannot be used to purchase this type of home.
In contrast, a “second primary residence” is a home where you spend more than six months in a year. To be eligible, you must have enough entitlement and income to qualify for both houses.
Can I use a VA loan to buy a vacation home?
Because you can only use a VA loan for a primary residence, you cannot use a VA loan to buy a vacation home, unless you plan to spend the majority of the year there or you plan to live in the home upon retirement within the same year of purchasing it. However, one workaround is to use your old home as a vacation home and the new home as your primary residence. In this case, you would need to be able to keep up with both mortgages.
Can I use a VA loan for an investment property?
No. You cannot use a VA loan for an investment property, but you can turn your current home into a rental property while using a VA loan to purchase a new primary residence. You can also use your VA loan to purchase a multiple-unit property so long as you intend to make one of the units your primary residence. This scenario allows you to rent out the other units.
How the VA bonus entitlement works
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs (VA) exclusively for active-duty military service members, veterans and eligible surviving spouses to buy or refinance a home with no down payment or mortgage insurance. The VA does not lend money but guarantees up to 25% of the loan; this guarantee is called an entitlement.
The VA bonus entitlement can help you finance a home with a purchase price of above $144,000 possibly without a down payment or to purchase a second primary residence. The VA loan entitlement refers to the maximum dollar amount that the VA will pay to your mortgage lender if you go into mortgage default, or fail to repay your loan.
With VA loans, there are two forms of entitlement: basic entitlement and bonus entitlement. The basic entitlement is $36,000, or 25% of $144,000. For homes with a sticker price above $144,000, the VA provides a bonus entitlement worth 25% of the home loan amount. Lenders will let you borrow up to four times the entitlement with no down payment.
Bonus entitlement example
Let’s take a look at a scenario with the remaining entitlement. We’ll assume you currently own a house that you bought for $200,000 with a VA loan with no down payment. So, you had to use $50,000 worth of entitlement to purchase it, or 25% of the purchase price.
$200,000 (purchase price of the home) x 25% (amount VA guarantees) = $50,000 entitlement
If you’re not expecting to sell the house, you may keep it and rent it for the time being. You can find your remaining entitlement information on your Certificate of Eligibility (COE). You’ll want your COE in hand before you start trying to crunch numbers on your bonus entitlement.
If you are moving to a city where the county loan limit is $510,400, and the home you are interested in buying is $250,000, the bonus entitlement calculation would be as follows:
First, multiply the local loan limit by 25% to get the maximum VA guarantee. In this case, it is $127,600.
$510,400 x 25% = $127,600 maximum VA guarantee
Next, you subtract the amount of entitlement you’ve already used from the maximum guarantee to determine how much bonus entitlement you have left.
$127,600 – $50,000 = $77,600 bonus entitlement
The VA will allow you to borrow up to four times the amount of your available entitlement for a new loan; $77,600 x 4 = $310,400. The $310,400 figure is the maximum loan amount you’ll be able to get without a down payment. The $250,000 house is below the maximum limit, meaning you’d be able to buy the new house with no down payment.
Because the $250,000 house you are thinking of buying is less than the $310,400, you would not be required to make a down payment.
Understanding loan limits
Borrowers with remaining entitlement are subject to the 2021 VA loan limit, which is $548,250 for one-unit properties in most parts of the United States. You can look up the exact conforming loan limit in your county on the Federal Housing Finance Agency (FHFA) website. While most areas of the country have a maximum VA loan limit of $548,250, some high-cost areas have limits that go up to $822,375.
How many times can I use a VA loan?
VA loans are not a one-time benefit; you can use them multiple times so long as you meet eligibility requirements. You can even have multiple VA loans at the same time. Here’s how it might work:
→ You sell your home and pay off the existing VA loan. Then you can either restore your entitlement or use your remaining entitlement to cover a new VA loan.
→ You can keep your current home and rent it out as an investment property. You could buy a second home using your remaining entitlement. This results in having two VA loans outstanding at the same time.
→ You’ve repaid your previous VA loan in full but kept the sold the home you bought with it. In this case, you restore your entitlement, but you can only do this one time.
