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Utilizing a VA Loan to Purchase a Second Home

VA loans, put forward through the Department of Veterans Affairs, are a great way to purchase a home or refinance for a better rate. But did you know that with VA loans, you can also get approval for buying another property? The process of using your current VA loan benefits to purchase an additional property is known as “piggybacking” because it allows eligible borrowers to use the same VA loan for more than one property.

Florida Mortgage company explains that you can combine your current VA loan benefits with those of another veteran to buy a second home. The benefits of piggybacking are pretty straightforward; it cuts down on an application process and can lower your monthly housing costs while you build equity in two homes instead of one!

In this blog we’ll walk you through the steps necessary to get this type of loan so that you can buy a second home.

So for the Veterans who have already acquired their VA home loan and are looking ahead to take the next big step this is your chance, Get Ready!

Steps on how VA loans work to buy a second home

Step 1: Determine whether or not you’re eligible for another VA loan

To find out if you are eligible for another VA home loan, you will need to answer the following questions:

  • Have you had your VA loan for at least 12 months?
  • Do you have a credit score of minimum 620?
  • After financing the second home, will your total debt-to-income ratio be no greater than 41%?

If it is yes to all three questions, you may be eligible. While the VA doesn’t set a maximum amount for how much of your home purchase can be covere by piggyback financing, mortgage lenders in Florida will.

Your lender is need to approve or deny your loan within the lending limits that the VA has in place for its “base” loan limit. 

Even if you haven’t had your VA loan for at least a year (which is not advisable), and even if your credit score isn’t quite up to par as long as your debt-to-income ratio will be under 41% after buying another home, you may be eligible for a second VA loan.

Step 2: Decide which property will be your primary residence

Before you can get your next Florida VA loan, you must decide if the new property will be considered your primary residence or not. This decision is drive by determining where you and your family spend most of your time. If the property you will be “piggybacking” onto your existing VA loan is not where you and your relatives live most of the time, it cannot be view a primary residence.

For example, if you stay in an apartment downtown during the week and only go home to your farmhouse on weekends, then your townhouse could not be view a primary residence. 

Step 3: Get your second mortgage approved

Here, with the piggybacking process, you can combine your current VA loan benefits with those of another veteran to buy a second home. There are no barriers on number of people can be on one loan, so if you have buddies that are also veterans, they can join you in getting the home of their dreams.

When considering this option, it is essential to consider that your veteran co-borrower must be creditworthy and meet the same requirements that you do. If he or she doesn’t meet these qualifications, you may not be able to get your loan confirm. Know a step-by-step guide on how to get a mortgage.

Step 4: Get your documentation together

When you apply for a second VA loan, the lender will want to see the documentation. That verifies your primary residence details and the proposed new property. You’ll need to provide:

  • Loan statements and escrow statements for your current home
  • Experts have more information about Florida Mortgage loans if you have a non-VA loan

Documents to show proof of occupancies, such as utility bills and receipts for property taxes.

Step 5: Apply for and get your loan approved

It takes the same steps as you would if applying for a first VA loan. You’ll need to fill out and submit your application, including military service verification. If there is a credit check (which is standard), you’ll need to supply an authorization before the check is run.

You’ll also need to provide documentation showing your current property’s balance, monthly payment, and monthly escrow deposit. There are no limitations on the number of properties you can finance with VA loans. 

Is it legal to use a VA loan for a second home?

Yes! Having a VA Loan can help you finance a second home or vacation residence. There are no certain restrictions on the number of residences that can be capitalize through a single VA loan. Your primary residence must meet certain occupancy requirements to qualify as a “bona fide” occupancy.

For instance, if you stay in an apartment downtown during the week and only go home to your farmhouse on weekends, then your townhouse could not be considered a primary residence.

This is where multiple VA Loans can come in handy!

Bonus entitlements: what they are and how to claim them

VA loans can help you finance more than one home. If you’re a decorated Veteran who has earned the right to additional benefits, your “entitlement” will depend on how many Campaign or Service Awards you’ve received. 

For example, if you earned the Army Combat Infantry Badge and the Expert Infantryman’s Badge (which puts you in line for a total of $10,170 in entitlement). So now, when you need financing for a second home, you will be able to use the combined benefits.

Veterans can also ‘stack’ their entitlement by using it to fund one loan partially. And then applying the remainder towards another VA loan (subject to lender approval).

Conclusion

VA loans can benefit many Veterans; however, certain eligibility requirements must be met to qualify for a VA loan. It is essential to note that these requirements do not discriminate against anyone group or individual. And are simply meant to set the general standards by which all VA loans are issued. In Florida, the mortgage company is the best place to get a VA loan. If you think you might qualify for a VA loan, put in a request or contact us today.

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