- As an Air Force veteran, I have access to VA loans, which require no down payment.
- I used the VA loan twice to buy myself a house. When I moved, I turned my first house into a rental.
- I hope to one day use the VA loan to purchase a multifamily property that I can live in and rent out.
I spent a lot of time researching military benefits. As a naturally thrifty person, joining the Air Force has unlocked a wide variety of tools for my financial success. This has included the Post-9/11 GI Bill, a high interest savings account, and health insurance provided by VA. But one of the biggest perks I experienced was the VA loan, which I used multiple times.
Most military people have heard of the VA loan. Federally insured, these loans will allow eligible service members to put 0% down on a home loan without having to pay mortgage insurance premiums.
And while the interest rates on these loans tend to be a bit higher than standard mortgages, a low credit score requirement and no down payment have helped make home ownership affordable for many.
You can get more than one VA loan
Perhaps the best part of the VA loan entitlement is that, unlike many service member benefits, your eligibility does not end with your service. This means veterans can benefit from the same loan options as their active duty counterparts – and the loan can be used multiple times.
Now, when I say multiple times, I don’t mean you can get one loan, pay it off, and then get another VA loan. There is a fairly common misconception that you can only hold one VA loan at a time, but the truth is that you have a specific amount of money that you can borrow against. If your first home does not exceed this amount? You can get another loan.
That doesn’t mean you can go willy-nilly and buy every property you see. Most of the time, you will need to have a good reason for buying another home.
This is largely because any home you buy with a VA loan is meant to be a primary residence. So if you already have a home, but want a second one just 50 miles away, chances are the banks will consider it a vacation property and won’t approve you for another loan.
I have used my VA loan entitlement twice so far
In my case, I first purchased property in August 2017 after accepting a job offer in Washington, DC. A few years later, I went back to school, changed careers, and decided to return home to California. Because I hadn’t used all of my rights—and because I was doing a huge move across the country—I was able to qualify for a second VA loan.
The path VA Loan Entitlement is calculated is a little tricky, and the government’s own websites aren’t particularly intuitive. But, essentially, eligible service members receive two levels of loan entitlement.
The base tier includes $36,000 of VA support. Since the VA only guarantees 25% of your loan at any given time, this essentially gives you $144,000 in purchasing power.
However, there is a second tier of entitlement available to members for the sum of $125,800 (meaning you can borrow up to four times that amount). Add those two together and you have a buying power of $647,200. (Be aware that these loan limits only apply when you are looking for a second VA loan. You have no loan limit on your first VA loan.)
My first condo cost $330,000 and my second $400,000. Since the total of those two loans was over that $647,200, I had to put down a down payment on my second property, but if you’re not using the full entitlement, you’d still only need 0% advance payment.
I applied for and received my second VA loan in June 2019. Luckily, since it had been over a year since I purchased my original property, I was able to rent it out with no problem.
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I am earning passive income on my first property
Today, I call California home again (when I’m not traveling, at least). Together, my two VA loans have been a huge boon. Not only am I able to earn additional income on my original condo, but not having mortgage insurance for my second property saves me hundreds of dollars every month.
Although I am no longer in the Air Force, I will always be grateful for the opportunities it gave me. My next goal? Selling my single-family condo and moving into a four-unit residence using – you guessed it – my VA loan.