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VA Loan for a Second Home: How It Works

Susan Kelly

Nov 15, 2023

Are you interested in buying a second home and curious about your loan options? The VA Loan program is an incredible choice for service members, veterans, and their families. It's one of the most flexible mortgage options - without requiring any down payment or private mortgage insurance (PMI).

If you qualify for it, a VA Loan can provide competitive interest rates and offer discounts on closing costs that could save you thousands of dollars. In this post, we’ll look in-depth at how a VA Loan works when purchasing a second home: from eligibility to benefits!

Introducing VA Loans for Second Homes

If you’re a service member, veteran, or surviving family member of one and are interested in buying a second home, the VA Loan program can offer incredible benefits. Unlike other loan types, it does not require any down payment or private mortgage insurance (PMI). Plus, eligible veterans may take advantage of competitive interest rates and discounts on closing costs.

The VA Loan program is backed by the Department of Veteran Affairs (VA) and allows qualified borrowers to purchase a single-family residence that will be used as their primary residence. It’s important to note that the VA Loan cannot be used for rental properties or investment purposes.

Benefits of Choosing a VA Loan for Your Second Home

1. Zero Down Payment

VA Loans don’t require any down payment, which means you can purchase a home with no money out of pocket.

2. Competitive Interest Rates

You may qualify for competitive interest rates, usually lower than other loan types.

3. No Private Mortgage Insurance (PMI)

Because the VA guarantees a portion of your loan, lenders won't require PMI, which could save hundreds of dollars per month.

4. Flexible Credit Requirements

VA Loan credit requirements are more flexible than those associated with conventional loans, making qualifying for financing on a second home purchase easier.

5. Closing Cost Discounts

As part of the VA Loan program, eligible borrowers may receive discounts on closing costs.

6. Streamlined Refinancing Options

If you already have a VA Loan and want to refinance your second home, the VA offers streamlined refinancing options that require little paperwork.

7. No Prepayment Penalties

Unlike other loan types, a VA Loan won't charge you any prepayment penalties for paying off your loan earlier than expected.

8. Full entitlement loans

One of the biggest advantages of a VA Loan is that it provides full entitlement loans up to the conforming loan limit for the county where the property is located, with no limits on how much you can borrow as long as it’s within this amount.

9. Reusable Benefits

If you’ve already used your VA Loan benefit once, you can use it again for a second home purchase.

10. No Limits on Number of Properties

VA Loans don't have any restrictions on how many times you can use the benefit – so you can buy as many homes as you want with a VA Loan!

How the VA bonus entitlement works

The VA bonus entitlement allows eligible borrowers to purchase a home with no money down and no private mortgage insurance (PMI). When you apply for a VA Loan, the Department of Veterans Affairs grants an “entitlement” that essentially serves as financial backing from the government. This means lenders are more willing to offer VA Loans because they are less risky due to being partially guaranteed by the federal government.

The bonus entitlement is separate from your regular entitlement amount, and it can cover up to 25% of a loan amount that exceeds the conforming loan limit for your county or up to $68,250 in 2020. If you want to buy a second home but need more financing than your regular entitlement, the bonus entitlement can provide up to $68,250 more for your loan.

For example, you purchase a second home in Los Angeles County for $700,000. Your regular entitlement would cover only up to $510,400; the remaining amount would need to be covered by other sources, such as a down payment or gift funds. However, if you have a VA Loan with a bonus entitlement, this would allow you to get an additional $68,250 from the government, which could then be used towards covering the extra cost of your purchase.

Bonus entitlement example

Price of home: $700,000

Regular entitlement: $510,400

Bonus entitlement: $68,250

Total amount covered by VA Loan program: $578,650 (with no money down)

Understanding VA loan limits

VA Loan limits are based on the county where your second home is located, varying from state to state. VA Loan limits range from $510,400 (Los Angeles County) to $515,200 (New York City).

For example, if you want to purchase a second home in Los Angeles County with a VA Loan, you would be eligible for up to $510,400. However, if you need more money than that, you can apply for a bonus entitlement which could provide up to an additional $68250.

The bottom line is that VA Loans are one of the most flexible loan options, offering great benefits such as no down payment or PMI requirements. If you qualify for this mortgage option, you could use it to purchase a second home, with the bonus entitlement helping to cover up to 25% of your loan amount that exceeds your regular entitlement.

The eligibility requirements for using a VA Loan on a second home

You must meet certain eligibility requirements if you’re considering using a VA Loan when purchasing a second home. The Department of Veteran Affairs (VA) requires that all applicants for the VA Loan program be either active-duty or honorably discharged service members, spouses of veterans who have died in the line of duty, or surviving family members of veterans who have died as a result of their service-related disability.

In addition to these eligibility guidelines, you must also meet certain credit requirements. Generally speaking, lenders will look at your credit score and debt-to-income ratio when determining your eligibility for VA.

You must meet credit and income requirements to qualify for a VA Loan. Your credit score should be at least 620 or higher, and your debt-to-income ratio (DTI) should no more than 41%. It would help if you also showed that you could afford the loan payments on the second home purchase, which means having enough money in cash reserves.


Q: Who is eligible for a VA Loan?

A: Veterans, active-duty service members, National Guard and Reserve members, and certain surviving spouses of veterans, are all eligible. To be eligible for the loan program, you must have been on active duty in the U.S. military for at least 90 days during wartime or 181 consecutive days during peacetime—or 6 years in the Reserves or National Guard—and not have been discharged under dishonorable conditions. You must also certify that you intend to use the property purchased with the VA Loan as your primary residence.

Q: Can I apply for a VA Loan if I own a home?

A: Yes! The VA allows borrowers to purchase multiple homes using the VA Loan program. However, you must certify that you intend to use the property purchased with the loan as your primary residence.

Q: How do I apply for a VA Loan?

A: To begin the application process, you must obtain a Certificate of Eligibility (COE) from the Department of Veterans Affairs. You can obtain this by visiting their website or through your lender. Once you have your COE, you can shop for a lender and apply for your loan. It’s important to note that lenders may require additional documents beyond what is needed for a COE.


The VA Loan program is an incredible option for veterans, service members, and their families looking to purchase a second home. It offers competitive rates and requires no down payment or private mortgage insurance (PMI). Plus, borrowers can get discounts on closing costs that could save them thousands of dollars.

To take advantage of this loan program, you must be eligible and apply for a Certificate of Eligibility from the Department of Veterans Affairs. With these steps in mind, you’re on your way to using a VA Loan to finance your second home!

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