The answer depends on how you plan to use the home, because the VA guarantees loans only on homes you intend to live in and won't back a vacation home or an investment property. If you're moving and want to keep your current home, though, you may be able to buy your next home with a second VA loan while you still have the first one.
Vacation Homes and Investment Properties Don't Qualify
Every VA loan has to meet the VA's occupancy requirements, which in most cases means you certify that you intend to live in the home. The VA says you can't use a VA loan to buy a vacation home or an investment property, and that misrepresenting your intent to occupy a home could result in legal action against you. You can read about the exceptions the VA makes for deployment and retirement in this guide to VA loan occupancy requirements.
If you want a cabin for weekends or a condo you plan to rent out from day one, you would need to finance it with a different type of mortgage, such as a conventional loan. A lender can walk you through the down payment, credit, and income requirements for that type of loan.
Keeping Your Current Home and Buying Your Next One
The VA allows a second VA loan when the new home will be your primary residence. If you have enough remaining entitlement, or the VA has restored the entitlement you used on a previous home, and you meet your lender's requirements, you may be able to use your benefit again even while you have another VA-backed loan.
Veterans often consider this option when a service member receives orders to a new duty station, a Veteran takes a job in a new city, or a family outgrows its home. In each case, the Veteran can keep the first home and buy the next one with a second VA loan, as long as the Veteran intends to live in the new home.
How Remaining Entitlement Works on a Second VA Loan
You can find how much entitlement you've already used in the Entitlement Charged column of your Certificate of Eligibility (COE). To determine how much you can borrow with no down payment on a second loan, the VA uses the county loan limit where the new home sits, which matches the Federal Housing Finance Agency's one-unit conforming loan limit. For more on the difference between full and partial entitlement, read about how VA loan limits are calculated.
In one VA example, a Veteran named John bought his first home in Tampa with a $300,000 VA loan and had $75,000 of entitlement charged on his COE. He takes a job in Orlando, where the county loan limit is $832,750, and wants to buy a $500,000 home there while keeping the Tampa home. Here is how the VA might calculate his remaining entitlement:
- Multiply the county loan limit by 25%: $832,750 × 25% = $208,187.50.
- Subtract the entitlement John has already used: $208,187.50 − $75,000 = $133,187.50.
- Multiply the remaining entitlement by 4: $133,187.50 × 4 = $532,750.
Because John can borrow up to $532,750 with a 25% VA guaranty, he can buy the $500,000 Orlando home with no down payment, as long as the home appraises at value, he intends to live in it, and he meets his lender's underwriting requirements. As a rule of thumb, your lender will want enough remaining entitlement to guarantee at least 25% of the new loan before approving a zero-down VA loan. If you don't have enough, your lender may ask for a down payment to cover the difference.
The VA may also be able to restore entitlement you used on a previous loan if you've sold that home and paid the loan in full, or if you've paid the loan in full and kept the home, although the VA allows that second option only once.
Costs to Plan for When You Carry Two Mortgages
When you use your benefit again, you may pay a higher VA funding fee than first-time users, depending on your down payment, unless you qualify for an exemption, such as receiving VA compensation for a service-connected disability. You'll also make two mortgage payments and pay taxes, insurance, and maintenance on both homes, so the VA recommends making sure your budget can support those added costs before you buy.
Learn More About Using Your VA Home Loan Benefit
If you're planning to buy your next home, explore more guides on using your VA home loan benefit.
FAQs
Can I use a VA loan to buy a vacation home?
The VA requires you to certify that you intend to live in the home, so you can't use a VA loan to buy a vacation home or an investment property.
Can I have two VA loans at the same time?
You can hold two VA loans at once if the new home will be your primary residence, you have enough remaining entitlement or make any down payment your lender requires, and you meet your lender's credit and income requirements.
Do I have to sell my first home to use my VA loan again?
You can keep your first home and use your remaining entitlement to buy a new primary residence. If you've paid off your previous VA loan in full, the VA may also restore that entitlement, although if you keep the home, the VA allows that restoration only once.
Will I pay a higher funding fee on a second VA loan?
Depending on your down payment, the VA may charge a higher funding fee after first use, although Veterans who receive VA compensation for a service-connected disability don't pay the funding fee at all.
