VA Loans: Reusing VA Loan Eligibility
VA home loans require a borrower to establish eligibility for the VA loan benefit before the loan application process can begin. A borrower applies for a VA Certificate of Eligibility, and once received either by mail or electronically the borrower and lender can work together on the VA mortgage loan.
Some borrowers use their VA loan eligibility and later decide they would like to apply for another VA home loan. This would seem to be the case for one reader, who asks:
“How do I find out if I can use my VA loan again?”
According to the VA official site, “…Your eligibility is reusable depending on the circumstances. Normally, if you have paid off your prior VA loan and disposed of the property, you can have your used eligibility restored for additional use.”
The VA adds that on a one-time only basis, a borrower can have VA loan eligibility restored “if your prior VA loan has been paid in full but you still own the property. In either case, to obtain restoration of eligibility, the veteran must send a completed VA Form 26-1880 to our Atlanta Eligibility Center.”
The VA adds, “To prevent delays in processing, it is also advisable to include evidence that the prior loan has been paid in full and, if applicable, the property disposed of.”
Borrowers are also entitled to apply for another VA home loan using any remaining, unused eligibility that might have been left over from the original home loan.
In these cases, the borrower may be required to provide a larger down payment, qualify for different terms and conditions, and comply with any lawful conditions placed on the loan as a result of only using partial eligibility. The VA emphasizes this in its Eligibility FAQ,
“If a veteran has already used a portion of his or her eligibility and the used portion cannot yet be restored, any partial remaining eligibility would be available for use. The veteran would have to discuss with a lender whether the remaining balance would be sufficient for the loan amount sought and whether any down payment would be required.”