For people who are in the military, reserves, or retired, they have the option to use a Veterans Administration Loan Program (VA). A VA loan is a loan program that allows buyers that have current or past military service to buy a home with no down payment or mortgage insurance. The misconception about a VA loan is that if you use it a homeowner will have to sell your home or pay it off before they can use the program again. In most cases that is true but there are some cases where you can get a Second Tier Entitlement VA Loan.
Veterans and active duty military are entitled to this program the second time around- they just need to accomplish the basic eligibility requirements. A Second-tier VA loan must still be issued by a VA approved lender.
What are the Entitlements for a VA Loan Borrower?
Entitlements are the maximum guarantees (in money) that the VA will provide to a lender for any eligible VA Loan borrower.
- The VA guarantees to lender $36,000 primary entitlement and a secondary entitlement of $68,250. Second-tier entitlements are tied to VA county loan limits.
- In the event that the veteran or active duty military’s entitlement is $0 after purchasing the first house, they can still use their second-tier entitlement. This time there will be a standard minimum and maximum loan limits on what they can use to buy their second home.
- The minimum loan amount is often $144,000 as set by the VA. The maximum loan amount for second-tier entitlement is 260,000. It can be higher depending on the VA formula.
The best way to see if you qualify for a second-tier entitlement is to talk with a mortgage broker who is knowledgeable about VA loans. Call me, I have mortgage brokers that can help you.