It’s not often, but VA borrowers may have the ability to maintain two VA home mortgage loans at the same time. Typically, the scenario involves a VA homeowner who has to relocate but wants to keep and rent out his or her primary residence. To take advantage, the veteran should look into the VA Bonus Entitlement program.
The guaranty is what the VA promises to pay the lender, generally 25% of the loan amount, in case the loan goes into default. For example, if a person defaults on a VA loan for $100,000, the lender would net $75,000 and the VA would pay the lender $25,000 to make up the difference. Because of this guaranty, mortgage lenders are able to provide VA loans at 100% of the value or purchase price – hence zero down.
Eligible veterans in most parts of the country have a primary entitlement of $36,000 and an additional, secondary entitlement of $70,025. Add those together and you get $106,025. That’s the maximum amount of VA loan entitlement for borrowers in most of the country (buyers in high-cost counties actually have more). For example, on a typical $200,000 loan in a non-high-cost county, you’re using $50,000 of entitlement. The remaining entitlement is how VA buyers can look to have more than one VA loan at the same time or purchase after experiencing a foreclosure or a short sale.
Here’s the means by which the math works:
County limit x 25% = Maximum Guaranty
Maximum Guaranty – Entitlement Used = Entitlement Available
Entitlement Available x 4 = Maximum Loan Amount With No Down Payment
Contact your Maine Mortgage Broker today to learn more about using your VA Entitlement.