How Many VA Mortgages Can I Have At The Same Time?

[Marshall F. Graham]

How many VA mortgages can I have at the same time?

Marshall F. Graham
Aulds Horne and White
(318) 869-0187
www.auldshorneandwhite.com
marshall.graham@auldshornewhite.com

December 9th, 2011

The Veteran’s Administration (VA) guaranteed home loan program is designed to provide housing for individuals who have fought overseas, or who have been active reservists for a period of six years. VA does not lend the money themselves, but are instead an insurance company of sorts that guarantees a specified amount of funds to the lender in the unfortunate case of a veteran’s default. According to the VA, each veteran is allowed to have two home loans at the same time, as long as the veteran intends to occupy the new property, and the potential property is located in a different city than the current VA guaranteed property.
To determine a candidate’s level of eligibility, the veteran must first obtain his DD214 eligibility form. This form will not only dictate whether the veteran is eligible for a VA home loan in the first place, but will also display his or her amount of basic entitlement. A veteran is considered to have full basic entitlement if the DD214 displays $36,000 available. Since the VA guarantees 25% of the loan, the $36,000 of basic entitlement means that a veteran can purchase a home up to $144,000. According to the VA, the default maximum loan amount is currently set at $417,000. The maximum loan amount is higher in certain areas of the country due to a higher cost of living. Using the 25% VA guarantee rule, means that the borrower actually has the following amount of entitlement available:

$417,000 * .25 = $104,250
$104,250 is broken down in the following categories:
Basic Entitlement: $36,000
Bonus Entitlement: $68,250

Example 1:
Veteran purchases a home in Marshall, TX for $130,000 and places zero down. He later obtains a position in Shreveport and decides to rent out his current home. At this point, the veteran has already used up his basic entitlement, but has yet to use his bonus entitlement. Assuming that his income allows for the purchase price in regards to affordability, how much of a home would the veteran qualify for to purchase a home in Shreveport?

Basic Entitlement: $0
Bonus Entitlement: $68,250

The VA will guarantee up to 25% of the loan, so the formula is as follows:

$68,250 * 4 = $273,000

The veteran is allowed to obtain an additional zero down VA mortgage not to exceed $273,000. However, since the veteran already owns a property within the basic entitlement range, then they cannot purchase another property with a loan amount less than $36,000 * 4 = $144,000.
The veteran in Example 1 may obtain a second zero down mortgage as between the range of:

$144,000 to $273,000

Example 2:
Veteran purchases a home in Marshall, TX for $215,000 and places zero down. He later obtains a position in Shreveport and decides to rent out his current home. At this point, the veteran has already used up his basic entitlement, as well as a portion of his bonus entitlement. Assuming that his income allows for the purchase price in regards to affordability, how much of a home would the veteran qualify for to purchase a home in Shreveport?

Entitlement used: $215,000/4 = $53,750
Basic Entitlement Used: $53,750 > $36,000 = ALL
Bonus Entitlement Used: $68,250 – ($53,750 - $36,000)
= $68,250 - $17,750
=$50,500

Based on the veteran’s amount of bonus entitlement available, he or she may pursue an additional mortgage for the amount of:

$50,500 * 4 = $202,000

Since the veteran has already used his basic entitlement, then he may not pursue a mortgage <$144,000
In Example 2, the veteran may pursue a second zero down mortgage as long as the mortgage falls between:

$144,000 and $202,000

This article, as well as other mortgage industry specific articles can be found by going to www.auldshorneandwhite.com Aulds Horne and White has been providing mortgages within the Arklatex since 1957. Consider contacting Marshall F. Graham today to discuss your VA funding options.

Marshall F. Graham
Aulds Horne and White
(318) 869-0187
www.auldshorneandwhite.com
marshall.graham@auldshornewhite.com