A 2nd Tier VA Loan allows eligible veterans to use their VA loan benefits again—even if they haven’t paid off their first VA loan. Perfect for relocating, upsizing, or managing multiple properties, this unique benefit opens up real estate opportunities others don’t have. In this guide, you’ll learn exactly how it works, who qualifies, and how to apply.
What Is a 2nd Tier VA Loan?
A 2nd Tier VA Loan refers to the second layer of entitlement available through the U.S. Department of Veterans Affairs loan program. It allows qualified veterans or active-duty service members to secure another VA loan even if:
- They still own a home purchased with a VA loan, or
- They’ve defaulted on a previous VA loan.
This layered entitlement is part of what makes VA loans so flexible and powerful. According to the VA Lender’s Handbook, veterans have a basic entitlement of $36,000 and a bonus entitlement that can be tapped in higher-cost areas or for a second purchase. This is what enables second-tier usage.
Why It Matters:
In markets where military families often relocate or upgrade homes, understanding second-tier entitlement is essential. It enables homeownership continuity without financial penalty.
Benefits of Using a 2nd Tier VA Loan
Whether you’re a seasoned investor or moving duty stations, second-tier VA loans can be a game-changer. Here’s why:
No Down Payment (Again)
Just like your first VA loan, many second-tier loans allow zero down, depending on remaining entitlement and the county loan limit.
No Private Mortgage Insurance (PMI)
Avoid monthly PMI fees—saving you hundreds per month compared to FHA or conventional options.
Own Multiple Properties
Perfect for transitioning from a starter home to a larger one while keeping the first as a rental.
Relocation Ready
Ideal for military PCS moves—you can finance a new home before selling the old one.
2nd Tier VA Loan vs. First-Time VA Loan: Key Differences
| Feature | First-Time VA Loan | 2nd Tier VA Loan |
| Down Payment | Often $0 | May require partial DP |
| Eligibility | Full Entitlement | Partial/Remaining Only |
| Funding Fee | Lower | Higher (3.6% in most cases) |
| Multiple Properties | Not Applicable | Possible |
| Entitlement Used | None | Remaining Entitlement |
Bottom Line: While first-time use is simpler, second-tier usage offers strategic advantages for veterans in motion or investing.
How to Use a 2nd Tier VA Loan in 5 Easy Steps
Navigating a second-tier VA loan is straightforward with the right guidance:
1. Check Your Remaining Entitlement
Contact your lender or pull your Certificate of Eligibility (COE) from the VA to find out how much you have left. And learn VA Loan Eligibility Criteria: Who Qualifies for Full Financing?
2. Calculate Your County Loan Limit
Use the FHFA county limit tool to see how much loan you can get without a down payment.
3. Run the Math
Work with a VA-savvy lender to determine if a down payment is required based on entitlement used.
4. Get Pre-Approved
Just like the first time, pre-approval is crucial. Make sure your lender understands 2nd-tier usage.
5. Submit Your Offer and Close
Once pre-approved, shop, offer, and close—just like any traditional VA loan.
FAQs About 2nd Tier VA Loans
Can I have two VA loans at once?
Yes. As long as you have remaining entitlement and qualify financially, the VA allows multiple VA-backed loans at the same time.
Do I have to sell my first home to use a second VA loan?
No. You can keep the first home as a rental or secondary residence, provided your entitlement supports it.
Is there a higher funding fee for 2nd-tier VA loans?
Yes. The VA typically charges a higher funding fee (3.6%) for second-time use without a down payment, though exemptions apply for service-connected disabilities.
How do I know if I have enough entitlement left?
Review your Certificate of Eligibility or have a VA lender calculate it for you based on your previous loan balance and county limits.
Final Thoughts: Is a 2nd Tier VA Loan Right for You?
If you’re relocating, upsizing, or investing—without giving up your VA benefits—then a 2nd Tier VA Loan may be your smartest move yet. It’s a powerful tool for long-term wealth-building and lifestyle flexibility.
👉 Next Step: Ready to see how much VA entitlement you have left? Connect with a VA-approved lender or download your COE through va.gov.