You are right, another VA loan for an owner-occupied property is possible IF a veteran has unused entitlement. The VA entitlement is used in its entirety whenever the veteran obtains a VA loan to purchase a primary residence.
On December 27, 2001, President Bush signed into law HR-1291, The Veterans Education and Benefits Expansion Act of 2001, increasing the maximum VA entitlement from the present $50,750 to $60,000.
This gave the veteran with a recent VA loan another $9250 of VA entitlement; enough to purchase a $37000 owner-occupied property with 100% VA financing without paying off the first VA loan.
I’ve done all my homework (and searched this site) and can’t come up with an answer to this one. Notably, searching “VA” also brings up everyone from Virginia. Other combos don’t work for some reason.
I have had a person call me on a sign. They have some equity in their house that they are willing to give up “subject2”, but they want to sell the house outright because they will not obtain a “release” or some such from their VA “eligability” (spelling ok here?). They want to build a new house but they don’t want to “give up their ability” to obtain a VA loan.
I understand that some of these VA loans can be assumed outright but the seller told me that using this feature would also cancel their future eligability for a VA loan. Does anyone know how to spell “eligability.”
Anyone’s experienced help would be greatly appreciated.
Posted by Ed Copp (OH) on January 04, 2003 at 21:04:30:
The V.A. will not allow the vereran purchaset to have two V.A. loans, that he originated; at the same time.
Your proposal to do a subject to on his loan will not get him off of the mortgage obligation, so the V.A. will not let him have another V.A. loan until the old one is either paid off or he is released from his liability on the old loan. The V.A. will allow someone to assume his existing loan and release him from that liability if the new purchaser qualifies just as if it were a new loan, creditwise. The new purchaser need not be a veteran to assume this loan. This is not a subject to, it is an “assume and agree to pay”, which is very different. Then the seller would be reinstated with the V.A. and he could get a new loan.
The other way to get him off the hook, would be to refinance and pay his old loan off, and then there is always cash at closing. You might want to look for a partner with some cash, good credit or both. If the equity gained is sufficient it could be a good deal for all concerned.
Re: My first post–V.A. and spelling issue - Posted by RobH - Atl
Posted by RobH - Atl on January 04, 2003 at 19:48:04:
Hell Tony,
‘eligibility’ is how it’s spelled, but I have a question for you.
It appears that you know more about VA’s than I do… Can a VA mortgage cashed out like a conventional mtg? Can you use the same Assignment of Agreement contracts with the same contingency clauses?
Re: My first post–V.A. and spelling issue - Posted by RobH - Atl
Posted by RobH - Atl on January 04, 2003 at 19:47:12:
Hell Tony,
‘eligibility’ is how it’s spelled, but I have a question for you.
It appears that you know more about VA’s than I do… Can a VA mortgage cashed out like a conventional mtg? Can you use the same Assignment of Agreement contracts with the same contingency clauses?
According to the VA FAQ page, a veteran can originate more than one VA loan if only a portion of their eligibility was used on the first loan. A vet could actually buy a couple of cheap houses using VA loans.