Do you want to use a VA loan to purchase your next home, and do you have some questions about doing so? If so, it will help to know the following things about VA loans that you may not be aware of.
You Can Own Multiple Homes Using VA Loans
One misconception about VA loans is that you can only have one VA loan at a time. That is not necessarily true, since there are ways to get around the issue. The first step is to determine what the current cap is for how much you can borrow for a VA loan, which changes over time. You will then essentially purchase the second home with a VA loan while converting your original home into a rental property. However, this only works if the loan balance on both properties is below the total cap on VA loans that you can receive. This is known as the second-tier entitlement, and it's possible to use it to your advantage.
Your VA Loan Can Be Assumed By Another Qualified Borrower
Another thing to know about VA loans is that they can be assumed by another veteran in certain situations. The lender must approve the loan assumption, but it is possible to do in certain situations. This is common if you have a home near a current base, need to quickly move, and another eligible borrower wants to buy your home.
What happens with a loan assumption is that the person taking over the loan will maintain the current loan balance and interest rate, and essentially take over the loan exactly where you left it when you need to move. The person taking over the loan will need to pay a VA loan processing fee, but other than that, the loan will become theirs. This can then free up your VA loan entitlements so that you can purchase another home as your primary residence. You do not free up your entitlement if a civilian assumes your loan.
Always talk with your lender about loan assumption because it is up to their discretion if they will allow it or not. This is because the person assuming the loan needs to qualify for the loan just like you did.
You May Qualify For A VA Loan If You Don't Meet The Service Requirements
There are a variety of different service requirements that you must meet in order to qualify for a VA loan. However, do not assume that you do not qualify just because you are below the requirements. There are exceptions for service members that still allow you to get a VA loan. This includes if you were discharged due to a qualifying medical condition or have a disability related to your service.
For more information on VA loans, contact a professional near you.