cancel
Showing results for 
Search instead for 
Did you mean: 

Buying a second home with va options. Thank you!

tag
Momof6Blessings
New Member

Buying a second home with va options. Thank you!

Hi! Here's my situation and I would appreciate very much any feedback. Long time lurker first time poster. 

current Fico scores are all hovering right about 700

income is 6100 +2200+ 1100 total 9400 a month

va disability and a couple other things

 

 

I own a house for two almost three years and owe 330,000 at 2.75 interest rate. Current monthly payment is 1704. We could rent it out for 2200

 

I would like to rent this home out and buy in the next city closer to my sister and mom and buy one from 350-400,000. 
I don't have money to put down, but I have zero debt except for 25 on a credit card and my monthly housing payment. I pay utilities as well. 


credit looks good except for 1 charge off that's supposed to fall off in December for 10,000. I tried negotiating but they sent me a 1099-c so I'll just file on taxes and let it fall off in December. 

 

with all this information can someone please chime in and let me know if this is even possible? If not possible can I buy a house at a smaller amount? Do I have to wait till after December? Thank you!!!! 

6 REPLIES 6
ShanetheMortgageMan
Super Contributor

Re: Buying a second home with va options. Thank you!

The $10k charge-off shouldn't have to be paid off to qualify for a VA mortgage, partly because it's so old and also you've received a 1099 for it so it's unlikely they'll still pursue trying to collect from you. 

 

You didn't mention, but I am assuming the home you own right now has a VA mortgage on it.  If so, then even though you already have a VA mortgage it may still be possible for you to purchase another home using your VA benefits without a down payment.  It all comes down to how much entitlement you've used up, and thus, how much you'd have remaining.  I'd recommend either you obtain a copy of your Certificate of Eligibility (COE) by using the instructions at https://www.va.gov/housing-assistance/home-loans/how-to-request-coe/ (can be done online) or contacting a lender or mortgage broker and ask them to obtain your COE for you.  On the COE it'll list how much entitlement been used up.

 

I'm giving you a hypothetical example, but let's say your current VA mortgage has used up $87,500 in entitlement.  The remaining entitlement you'd have is 25% of the county loan limit, minus your already used entitlement.  The county loan limit can be looked up on this map from FHFA.gov and you'll most county's loan limits are $726,200.  Let's assume that describes your situation.  25% of $726,200 is $181,550 and now we deduct the $87,500 that has already been used, leaving a remaining $94,050 for your new purchase.  In order to do 100% financing your entitlement needs to be at least 25% of the sales price of the home you are buying, so the $94,050 translates to 100% financing on a $376,200 sales price.  If you bought a home for more than that, you'd just need put down $.25 for every $1 in sales price that exceeds $376,200.  For example a $400k sales price is $23,800 more than that and would require 25% of that difference as the down payment, or $5,950.  

 

The next part is determining if your income would be enough to qualify for the new home.  VA allows you to rent out your current home and use that rental income to offset it's housing expense, you just need a signed lease agreement.  Since $2,200/mo of rent exceeds the payment of $1,704/mo then your current housing payment wouldn't be included in your DTI.

 

So now you'd just have your $9,400+/mo of income to qualify for the new purchase.  Even using the highest property tax rates in the U.S. I can't imagine you'd have trouble qualifying for the sales price you'd be aiming for.  To determine if the "other things" part of your income could qualify we'd need to know what the source of that other income is, how long it's been received and potentially other details.

Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Southern California and lending in all 50 states
Message 2 of 7
VAMortgageGuy
Regular Contributor

Re: Buying a second home with va options. Thank you!

Hi @Momof6Blessings,

 

I agree with Shane, you shouldn't have any problems getting approved for a VA mortgage. I also agree that the charge off is not a problem. 

 

If the loan limit for the county you're buying in is $726,000, your VA entitlement is $181,500 minus the amount of entitlement tied to your current home. If the original loan amount on your current home was $344,000, you used $86,000 of your entitlement. That means you have enough available entitlement to buy a new home up to $382,000 with no down payment. Here's the crazy thing about VA. Let's say you need to push your price point up to $400,000. Most people think your down payment would be the difference between $400,000 and $382,000 or $18,000. It's not, it's actually 25% of the difference or just $4,500. 

 

I'm sure you've already done this but if not, make sure you check with the county to see if you're entitled to a reduction in your property taxes due to your service connected disability rating. For example: IL offers 100% property tax exemption for Veterans with a 70% or more serviced connected disability rating. Texas hits 100% when you hit 100%. Does that make sense?

Message 3 of 7
Momof6Blessings
New Member

Re: Buying a second home with va options. Thank you!

Wow thank you soo soooooo much for responding! That was so incredibly helpful! I'm going to go to my loan officer tomorrow and start asking some questions! I appreciate you!!! 

Message 4 of 7
Momof6Blessings
New Member

Re: Buying a second home with va options. Thank you!

That was Incredibly helpful!! Thank you so much for responding! It answered all my questions between the both of you and I'm really happy to be applying soon!! I'm going to talk to my loan officer tomorrow!  Thank you again!

Message 5 of 7
ShanetheMortgageMan
Super Contributor

Re: Buying a second home with va options. Thank you!

You're welcome & good luck!

Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Southern California and lending in all 50 states
Message 6 of 7
VAMortgageGuy
Regular Contributor

Re: Buying a second home with va options. Thank you!

You're welcome. Just a heads up. I've seen stories of lenders telling Veterans they cannot buy another home is the same area without a very good letter of explanation. That is not a VA requirement.

Good luck.

Message 7 of 7
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.