VA Loans The Second Time Around

Some people think VA loans are only for first-time home buyers; they mistakenly believe a borrower cannot use VA loan benefits to buy a home unless you have never purchased one before.

It is true that there are some restrictions and rules that govern VA home loans in cases where the borrower has purchased a home before using VA loan benefits, it is definitely NOT true that you can’t use your VA loan benefits if you have purchased a home before. It’s also not true that you cannot use VA loan benefits more than once.

Do you own property that was purchased with a conventional loan? Even so, if you have never used your VA loan benefits before, the “first time use” of the VA loan rules apply to you.

There is one important caveat--if you already own property but want to buy another home with your VA loan benefits, you should know that VA loans require occupancy--you can’t use a VA loan to purchase a seasonal property or buy a home you don’t plan to personally occupy as your primary residence.

Those who have used their VA loan benefit previously and want to do so again are required to apply for restoration of VA loan benefits assuming the first loan has been paid in full, sold, etc. Borrowers should know residency laws for VA loans apply to the new purchase--you will be required to occupy the new home as your primary residence.

Those who choose to apply for restored eligibility for a VA mortgage after having sold or paid off the home will be charged a higher VA loan funding fee than the first time VA loan benefits were used. This is called a “subsequent use” VA loan funding fee.

The subsequent use fee is higher because it’s assumed the VA borrower is in a better financial place than the first time the VA loan benefits were used.

Talk to a loan officer about VA loan options for purchasing another property. When you discuss your options with the lender, make sure you have proof that the original loan was paid in full or the property was sold, where applicable.

Rate this item
(1 Vote)

Top Reads This Month

  • FHA Refinance Loans and Interest Rates

    FHA mortgage loan rates and refinance loan rates stayed well below the 4 percent zone in the last days of the year--now that the new year is here, borrowers may not be sure how long the best-execution FHA mortgage loan interest rates reported at the end of the year may last. Do you know whether your’re ready to commit to…