Financial Advice Blog

Call it VA Loan Envy

by Community Manager  |  Retired, Army  |  San Antonio, TX  |  ‎06-02-2014 08:28 AM

Guy crunching numbers - shutterstock_126821831.jpg

I was telling a friend about the great deal I got when I refinanced my VA-guaranteed home loan, and he was flabbergasted. “What a sweet program!” he said. “I wish I could get one of those.”


Without military service, he’s not eligible. But his reaction got me thinking about what a good deal this program is for those of us who have worn the uniform. I guess I’d begun to take it for granted.


If the possibility of rising interest rates or higher home prices has you contemplating a new home loan or refinancing an old loan, don’t forget about our old friend, the VA home loan. The Department of Veterans Affairs website ( is a comprehensive resource for information on these loans, but here’s a quick refresher on some key aspects of the program.


The VA doesn’t loan out any money. Contrary to what many believe, the VA isn’t in the business of making loans. They just guarantee them. You’ll go through a normal lender, and you’ll still have to prove creditworthiness and income during the application process.


Eligibility is wide open. You could be eligible with as little as 90 days of active service during wartime or six months during peacetime. Reservists, guardsmen and spouses of those who died in service or from a service-connected disability also may be eligible. Not that long ago, you had to work through a relatively burdensome process to get a Certificate of Eligibility from the VA. Today, that process is easy and usually automated through the VA’s website or most lenders that handle VA loans


Primary residence. VA loans can be used only for your primary residence.  They can’t be used for rentals or vacation homes.  However, although it’s relatively complex, it is possible to have two VA loans at the same time. For example, if you bought with a VA loan and moved because of a job change, you might be able to use your remaining entitlement to get another VA loan to buy your new primary residence.


No down payment and no PMI. I think this was the point of greatest envy for my friend. With a conventional loan, you’ll typically need to bring a 20% down payment to the table or you’ll be required to purchase private mortgage insurance. Not so with the VA loan. Unless you’re receiving VA disability compensation, VA loans require you to pay a tax-deductible funding fee (typically 2.15% of the loan), but they don’t require a down payment or PMI.


Refinance options. You also can use a VA loan to refinance a conventional loan or another VA loan. If you’ve already got a VA loan, the Interest Rate Reduction Refinance Loan is a pretty great option. I know — I’ve used it twice. It has just a 0.5% funding fee, and there’s no appraisal or financial underwriting required by the VA (lender’s requirements may vary).


Buyer takeover. VA loans allow another buyer to step in and assume your loan. If interest rates eventually spike, this could be a nice feature. While the new buyer would have to come up with the cash difference between the loan value and the house’s market value, the terms of the loan could be a lot more favorable and the cost of the transaction could be substantially less.


It’s not one and done. Contrary to urban legend, you can use a VA loan more than once. If you’ve paid off the loan and no longer own the home, you are eligible again for a new VA loan.


The VA loan powered a generation of post-World War II homeowners. Almost 70 years later, it’s still a valuable, attractive benefit that’s worth investigating — even if it’s been decades since you wore the uniform.


And if it works out, you just might become the envy of all your non-eligible friends, too.





by Trapperj ‎09-30-2014 06:04 PM
We applied for a VA loan thru Quicken Loans. After more than 30 days and back and forth telephone calls, we were advised by Quicken Loans that the VA would not approve our loan on our house which is FREE & CLEAR of any loans or Leinster and our credit scores are above 800??? Why?
by Community Manager ‎10-01-2014 07:05 AM

Unfortunately, I don't have any idea. However, I would think that your lender should be able to clearly explain the rationale for what happened.  Go back to them and ask for clarification. Good luck!



by Cubs Fan ‎12-30-2014 03:55 PM
I had a VA loan. We short sold the house without any damage to our credit. We are now PCSing to TX to retire. Will there be any issue with getting another VA loan? If so how soon should we request pre-approval if we are taking a trip to look at houses in march?
by Cubs Fan ‎12-30-2014 04:01 PM
I used my va loan in 2009. We had to short sale our home in june 2012 due to a forced PCS. It did not affect our credit and our account was paid off. Am i able to use my VA loan again? I am PCSing to TX and we are looking at houses in march. How soon should i apply for a pre approval?
by Community Manager ‎12-31-2014 06:40 AM

It could be up to three years, but since you did the short sale on a VA loan, you may have to pay back the VA for the loss they suffered to fully restore your eligibility. I'd recommend you contact the VA directly to see where you stand.

by Aycock ‎01-14-2015 12:33 PM

You say that it's possible to have two VA loans at the same time, but it can't be used on rentals or vacation homes.  I have a VA loan on one home, but PCS'd.  So that home is being rented out.  I am buying another home where I am currently stationed, but want to refinance it.  I'm not able to refinance on the current home using the VA loan? Am I breaking a rule if the VA loan is supposed to be used for primary residence only since I'm not currently living in the first home?

by Community Manager ‎01-15-2015 07:23 AM

Since the home at your new duty station will be your primary residence, it could be possible to use another VA Loan to buy it. However, you would have to have remaining entitlement..  This could be a possbility, especially if you are moving into a high cost location. Check out example 2 on this VA document. Of course, you'd have to be deemed financially capable of handling both mortgages.


As far as refinancing goes, your original VA loan could be refinanced--since it would be a VA to VA refinance that doesn't require occupancy, but you do certify that the home was at one time your residence.   Hope that helps.

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J.J. Montanaro

Joseph "J.J." Montanaro is a CERTIFIED FINANCIAL PLANNER™ practitioner.

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