Veterans and active duty military with a VA Home Loan might be surprised to know that they can qualify to purchase or refinance a home with a second VA Loan based on what's called their Second-Tier Entitlement.
A lot of vets think they can only use their VA Loan once and they're trying to save their VA Loan benefit. The VA does allow for having two VA Loans at the same time.
Second-Tier entitlement is a great benefit because for those veterans using it, it means you don't have to sell your current property with a VA loan on it when obtaining the second VA Loan. However, you still have to qualify for the new VA Loan. Second Tier Entitlement is not widely used because of its complexity and plenty of lenders are not well versed in the calculations required. This does not mean that interested borrowers should wave the white flag and look elsewhere for a different home loan. You simply need to call a well-educated loan officer such as Susan Kinsey, who has helped hundreds of veterans use their benefit for having 2 VA loans.
Here are a few benefits pointed out to us by Susan Kinsey.
You can purchase a new primary residence before selling your current home with a VA loan on it.
You can refinance your current primary residence out of a more costly loan even if you have a current VA loan on a rental home you used to live in.
You can purchase a new primary residence while turning your current home with a VA loan on it into a rental home.
How does Second Tier Entitlement work? We are going to let Susan explain it to you.
An Example of calculating second-tier entitlement:
Veteran has used $60,000 of entitlement on a prior loan, which may not be restored because the loan is still active and is now a rental due to orders to transfer (or maybe you still live in the home). The Veteran is now purchasing a new primary residence for $350,000 where the county loan limit is $636,150.
$636,150 (County Loan Limit) X 25% (your VA guaranty) = $159,037.50 Maximum Guaranty
$159,037.50 - $60,000 (entitlement already used for active VA loan) = $99,037.50 Entitlement Available
$99,037.50 X 4 = $396,150 Maximum Loan Amount with 25% Guaranty – Since the proposed purchased price is less than the max loan amount, no down payment would be required.
If the Veteran would like to purchase a home for 400,000 using the same numbers above, they would be required to bring $962.50 as a down payment to meet the 25% guaranty.
$400,000 - $396,150 = $3850.00 difference x 25% = $962.50 down payment needed.
The above example can be used for a refinance as well. A reason to look at using this for a refinance would be that you are currently in an FHA loan with mortgage insurance or a Conventional loan with a higher rate. I have found that veterans who spoke to a lender to purchase a home and were told they could not have another VA loan incorrectly were put into other costly loans that they didn’t need to do. Another good example would be that you would like some cash out for home repairs and the FHA or Conventional rules are not to your benefit, consider using the VA loan for this.
If you are looking into a second VA loan, please start with a loan officer that knows how to calculate the entitlement correctly so you don’t put yourself in a position of thinking you qualify but don’t because the lender know all the rules to using a second VA loan.
What rules? There are simple things like knowing that the minimum loan amount has to be $144,000 to something not so well know such as helping a veteran who has had a previous foreclosure and how to calculate the entitlement tied up in that.
If you have a question, please Contact Us and we will be happy to assist you or help guide you to someone that can.
If you're in a VA Loan already and thinking about using your VA Loan again, call a VA Loan Specialists to learn more about your second-tier entitlement.
For a list of county loan limits, please email us or go to
If you would like to discuss your options for second tier availability to you, please do not hesitate to contact us, we are here to help educate veterans on their benefits!
The Team at 2 VA Loans
We would like to thank Susan Kinsey for her help and knowledge of the VA loan and the rules. She can be reached at the following, Susan can lend in all 50 states as well.
Susan Kinsey, NMLS # 218057, Phone 571-283-1337, Email Swallace@AccessNational.com.