VA Loan and Second Tier Entitlement

[Chris T.]

@Samantha Reeves

Hi Samantha,

I have read some of your post explaining VA Entitlement and you have done a great job clarifying some of the quirks that go along with VA loans. I do have some additional questions if you get the time to answer that would be wonderful.

I own a home that I bought using my VA home loan. The cost was $148,000 so I know I have $269,000 remaining in my second tier entitlement (Kansas City.) I plan on renting out my current home.

If I have this correct; once I have my home rented with a rental agreement for at least twelve months and a deposit check, this will offset the mortgage payment in the lenders eyes? Do I need to rent is out for a set amount of time before using my second tier entitlement?

Do I still need cash reserves if it’s rented? Also, I believe I cannot consider the income from the rented home for at least two years for future loans? This would be fine in my situation I just want the rental income to offset my current mortgage.

I plan on purchasing a duplex, triplex, or a quadplex with my second tier entitlement shortly after renting my house out. I know the minimum loan amount needs to be $144,001, but no more than $269,000 per my remaining eligibility, any amount over $269,000 I would be required to put a 25% down payment on. I also know I need to reside in the residence for the time set by the lender, not the VA.

I didn't have to pay the VA funding fee because of a service disconnected disability, would I need to pay it if I use my second tier entitlement? Are there any other addition fees with the second tier that aren't associated with the first?

Furthermore, do I need to have good reason to use my second tier entitlement like a job change, etc? It seems like most of the time active/reservist will get orders, but since I’m out that won’t happen. Is there a distance that the second property has to be within or exceed from my original home? 

Lastly, I can restore my entitlement by refinancing to a conventional non-VA loan option, but not the IRRRL?

Thank you for your time with answering this lengthy post. I hope it helps others who may have these same questions.

Chris

[Samantha Reeves]

@Chris T. looks like my previous comment was deleted. Not sure why that happened. 

@Paul W. Keep in mind that the home you purchase using your VA loan has to be your intended primary residence at the time you buy the home. Just wanted to make sure it was clear that you can't use a VA loan to purchase a strictly investment property.