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Getting a Second VA Loan

January 12, 2015

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Getting a Second VA Loan

va loanMany VA borrowers apply for their first VA loan not thinking about what they might want or need years down the line. That first home may seem perfect when it’s first purchased, but many first time home owners outgrow that home at some point.

Others may need to sell to relocate for a new job, a new career or simply a change of scenery. Regardless of the reasons, a VA borrower looking for another home will definitely start asking questions about what it takes to get a new VA loan and buy once more with all the benefits of a VA-insured mortgage.

What exactly does it take to get into a new VA loan?

For starters, it’s important to differentiate between a second VA loan for a home purchase and a “second mortgage,” where a borrower takes out a second loan on the property they already own. VA borrowers who want to buy a new home have to take steps to get their eligibility restored—they used VA loan eligibility to buy the first home and it must be restored before the second VA loan application will be considered.

Restored eligibility usually happens after the home purchased with the VA loan has been paid off by the owner or when the house is sold. But it’s not automatic–the buyer must apply for restoration with the VA.

Once the eligibility issue is settled, the buyer should be aware that just as with the original VA home loan they applied for, the new VA-guaranteed mortgage requires a VA funding fee. VA loan fees are higher for second-time borrowers.

First time VA borrowers pay a 2.15% VA loan funding fee for a no-money-down VA mortgage. Compare that with the VA loan funding fee for a second-time use, which is 3.30% at the time of this writing.

The VA rationale for the higher funding fee for second-time borrowers is simple; the Department of Veterans Affairs knows first time buyers have more budget constraints than a second-time buyer who is likely in a stronger financial position when they purchase for the second time.

Knowing these two critical issues for second-time VA borrowers is a huge help when planning budgets, selecting a lender and trying to prequalify. Once the buyer has restored VA loan eligibility, much of the rest of the process is similar to the first VA home loan, and the buyer should have an easier time knowing what to expect from the process having been through it once already.

23 Comments
  1. roy knox

    I would like to build a small house on my vacant land in Texarkana, Arkansas, with my VA benefits/certificate of eligibility. I am a veteran, age 70. What steps should I take?

  • Joe Wallace

    You can pre-qualify for a VA loan at VAloans.com using the online form to get started--it's best to have a look at the form to see the types of information you'll need before getting started. You can also contact the VA directly if you need additional information on your VA loan options at http://www.benefits.va.gov/homeloans/contact.asp

  • Jim Bartow

    Regarding previous conventional foreclosure - went out of business, (builder removeling - Bk discharged June 07 - last forclosure Sheriff sale 12/08 - redemption period up in June 09 - foreclosed home sold 11/09 - now,for the most part debt free - excellent cash reserves - excellent ratios...credit scores around 700...how long must we wait to get a VA loan - had one previously...35 to 40 years ago... Jim Bartow

    • Joe Wallace

      Hi Jim, thanks for asking. There's a seasoning period of two years for VA loans following foreclosure action. Some lenders require an additional year, but VAloans.com will work with qualified borrowers after the two year waiting/seasoning period.

  • Chris

    If I am a disabled vet whose funding fee is waived for Loan #1, would it also be waived for Loan #2?

  • Thomas

    If I have not used the the VA loan over 12 years and have sold my house a year after. Will I have to pay a second VA loan funding fee? Thomas

  • Ozzie

    Is there anyway to get another VA loan if I have not paid off my existing loan and don't want to sell the property? I moved due to a relocation and am interested in buying in another part of the country.

  • Robin Roberts

    We are still in the same home we purchased with a VA loan back in 1991. We refinanced back in 1993. Of course it was sold a few times to other mortgage companies along the way. But 1.5 years ago, we refinanced again from 7.5% to 5% with Wells Fargo. They paid off the original VA MTG and now the new 15 year mtg is an FHA mtg. So my question is does my husband need to contact VA to restore his entitlement since the VA loan was paid off? What documents does he need to provide? We are still living in the same residence, though. Is this the same thing since the VA loan was paid? Thank you very much for any clarification you can provide. Also, we may be looking to purchase a new home in the near future. If so, would he be eligible for a second VA loan?

  • Jason Talley

    I have previously had a home loan through the VA that was paid off and my eligibility was restored for the purchase of our second house here in Las Vegas. Due to the market, we are upside down about 20k and do not have the option to sell without taking a loss or foreclosure. We are being re located to Houston, Texas and want to know if we can buy a second home in Houston with the remaining eligibility on our VA. Our current VA loan is for 180k of the 417k. We plan on using our current home as a rental property. Thanks!

  • carl ealy

    Lost my job. my house was foreclosed on. I lost 2 cars 7 years ago. Can I ever buy a house with a va loan again?

  • CHARLES G EPPS

    Once I pay off the first V.A. Loan and I want to get a second V.A. Loan to purchase another home. will you give me a number that I can get through on to speak to a V.A. Rep

  • A Perez

    I first used a VA loan 27 years ago. I'm considering using it again. What would the VA funding fee be? Would it be 3.3% or considered first time?

  • Alise Perez

    I first used a VA loan 27 years ago. I'm considering using one again. What would the funding fee be? Would it be lower than 3.3%?

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