Secret about Two VA Loans at Once
There's a little known secret about VA loans that even lenders don't know about. There's been millions of veterans that have used their entitlement to purchase a home and have since sold the home, thus restoring their entitlement. Of those, there's countless ones that don't realize they can use their entitlement again to purchase another home, or even refinance into a VA loan. In fact, as long as they continue to restore their entitlement, they can continue to get VA loans.
That's not the secret I'm referring to though, even though many don't know that is the case. What so many more don't know, including lenders, is that veterans can have two VA loans at once. It's called "2nd Tier Entitlement". The main point to keep in mind if you are looking to qualify for a 2nd VA loan while all or a portion of your basic entitlement is being used, is this - Your 2nd VA loan MUST be more than $144,000.
How do I calculate 2nd Tier Entitlement?
You probably want to know how figure the maximum VA loan amount should you have a VA loan already, right?
Lenders that truly know how to calculate this number will give you a calculation that might make your head spin. At the very least it should have the same affect as a sleeping pill. It would probably look like this:$417,000 (assuming this is the loan limit for your county) X 25% = $104,250 - $36,000 (base entitlement) = $68,250 (bonus entitlement) + $21,853 (assuming this is the remaining entitlement on your COE) = $91,130 X 4 = $360,412 (maximum 2nd tier loan amount)
I actually grabbed that calc from another post to show the example. Now, if I do a reverse calculation, I can find out what the actual original loan amount was on the current home:
$36,000 (basic entitlement) - $21,853 (the assumed remaining entitlement) = $14,147 (actual entitlement used) x 4 = $56,588 (the original VA loan amount on the current home)
You're probably asking, why would you do that? What purpose would that serve?
Because there is a more TOP SECRET, secret to knowing how to calculate the maximum VA loan if you already have a VA loan...or even if you may have foreclosed on a VA loan and never restored the entitlement. It is absolutely amazing that even the smartest VA Loan Specialists that want to throw the mind-numbing guaranty/entitlement calculation at you, don't even know this. In fact, even the smartest VA Specialists have used the same calculation above, and because of its complexity, have come back with an erroneous answer.
So imagine, you're trying to buy a house and have gone almost all the way through the process of truly getting two VA loans at once. You've signed the purchase contract, put a huge earnest money deposit down, paid for an appraisal and the loan just went to underwriting. The whole time you've put your life in the hands of this seemingly too-smart-for-school VA "Specialist" and believed that he or she has calculated the maximum 2nd tier entitlement correctly. Then the bomb drops. The calculation was off. Now you have to bring an extra $5,600 to the table that you hadn't budgeted for or simply don't have.
That's not a position I would expect any veterans want to be put into. In fact, pretty much all veterans and current military have higher standards than that and expectations that their VA Specialist delivers exactly what they promise with no surprises.
That's why the more error-free (and Top Secret) solution should always be used....
I bet the curiosity level is pretty high right now. Unfortunately, I'm going to keep it Top Secret. However, if you are a veteran or currently on active duty and are wanting to have two VA loans at once, and you want to know what the Top Secret calculation is or just want to be sure you have a VA Specialist that knows how to use the calculation correctly to calculate (every time), the maximum 2nd Tier VA loan amount, I will point you in the right direction...due south of this paragraph you'll get everything you need to help you get your 2nd VA loan...and you won't have to pay a dime for the information or the loan. Some might call that a no-brainer. I call it helping those that have helped us.
Best of luck in your search for your new home!