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Mortgage Loan Question

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tsu1112
New Contributor

Mortgage Loan Question

Hello,

 

I currently have a VA home loan through CIti Mortgage since 2004. I want to purchase another home and know that I can only use my VA loan once at a time. My question is, are VA loans considered FHA or could I get a FHA loan while having a VA loan?

 

Thanks, in advance.

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cdtotten
Established Contributor

Re: Mortgage Loan Question

VA loans and FHA loans are administered by two completely seperate entities. In both cases, no money is ever lended by either organization, rather they are guarenteeing the loan will be repaid in case something goes wrong. Is the second home you are looking to purchase going to be investment property? FHA strictly prohibits investment properties being purchased with their loans. No matter what, you are going to have to figure in both housing payments in your DTI ratios which may through them way off.


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ShanetheMortgageMan
Super Contributor

Re: Mortgage Loan Question

You can get a 2nd VA loan if you have enough remaining entitlement.  Even if you don't, then a 25% down payment is required.  The entitlement you have provides a 25% guarantee on the loan, thus that is why a VA loan is 100% financing... so whatever remaining entitlement you have (1st & 2nd tier) would be 25% of what you could get 100% financing on with a new VA loan while still keeping your existing VA loan.

 

Here is some information I've previously stated about this (it was in response to someone else's question so forgive me if it sounds like I am talking to someone else):

 

To start, realize that the total entitlement (basic & 2nd tier) is $104,250 in areas that have the normal VA loan limit ($417k). That is the basic entitlement of $36,000 plus the 2nd tier entitlement of $68,250. This represents the amount of the mortgage that the VA guarantees. On a zero down loan, lenders require VA to guarantee 25% of the loan amount. So on a sales price of $144k, the VA guarantees $36,000 and the lender has no problem giving you 100% financing. However if you buy a home above $144k, and still want to 100% financing, it's still possible to do by using your 2nd tier entitlement amount of $68,250, which together totals 25% of $417k and is the VA loan limit in most counties. FYI, the total entitlement in areas that have higher than $417k VA loan limits is 25% of the county limit.

 

So hypothetically in your situation let's say you only have $11,000 of basic entitlement remaining, which translates to 25% of a $44,000 sales price you could get 100% VA financing on. He probably has his 2nd tier/bonus entitlement as well (call VA to confirm). $44,000 probably won't get what you need... so you would need to use your 2nd tier entitlement. The trick is that in order for the 2nd tier entitlement to kick in, your new loan needs to be over $144k, then you can use the additional $68,250, which is 25% of another $273,000, combined it'd be 100% financing up to a $317k loan amount. For every $100 over, a 25% down payment, or $25 down payment, is required.

 

http://www.benefits.va.gov/homeloans/docs/guaranty_calculation_examples.pdf are different examples of how entitlement plays a role in VA loans.

 

It's also fine to have an FHA loan at the same time as a VA loan.

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