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The total number of homes for sale hit a record low in August 2023. That means home sellers may get several offers when they put their house on the market.

To help stand out from the pack, some buyers choose to write an offer letter. They may believe an offer letter could help personalize the negotiation and possibly make a connection with the seller. But writing an offer letter comes with potential risks buyers should be aware of.

Thinking about writing an offer letter? Read on to learn how to write an offer letter for a house, what to say in the letter, what to avoid, how long the letter should be, and the risks that may be involved.

What Is a House Offer Letter?

A house offer letter is a personal letter written in hopes of helping to convince the seller to choose the buyer’s offer, especially when there are multiple offers on a house.

Offer letters have become more popular in recent years due to the high number of real estate bidding wars.

In an offer letter, a buyer, whether they’re a millennial homebuyer or any homebuyer, is trying to show the seller why they’re the ideal candidate for the house.

When writing a real estate offer letter, buyers often include certain details to help make a connection with the seller, such as:

•   Introductions. The potential buyer will want to say who they are, of course.

•   Contract details that might help. Buyers may want to briefly note that they’ve been pre-approved for a mortgage, are flexible with the closing date, or can otherwise meet the seller’s needs.

•   Compliments about the house. If there’s a well-tended garden or custom wall finishes, a buyer may want to note how much they like those things.

•   Points of connection. If a buyer noticed something in the house that could help them relate to the seller, like fishing gear in the garage or a piano in the living room, they might mention that they share those hobbies.

•   Explanation about their offer. A buyer could include the reason why they offered what they did for the house, but anyone who does this should be careful. Review it with your agent first to make sure you’re not saying something that might jeopardize the deal.

•   Thank them. Express gratitude to the seller for considering the offer.

💡 Quick Tip: You deserve a more zen mortgage. Look for a mortgage lender who’s dedicated to closing your loan on time.

How Does a House Offer Letter Work?

Since an offer letter is an informal gesture, writing such a letter is optional. Plus offer letters do have drawbacks (more on that below).

If a buyer does write an offer letter, it would typically be sent, along with the formal offer on the house, to the seller’s agent.

Recommended: How to Write a Letter of Explanation for a Mortgage

Is It Worth It to Write a Letter With a House Offer?

A personal letter could help you stand out from others who are bidding on a house, but there’s no guarantee of that. Plus, an offer letter could cause problems. The National Association of Realtors is wary of offer letters because they might run the risk of violating the Fair Housing Act, even unintentionally. The Fair Housing Act seeks to create a level playing field for all people renting or buying a home, getting a mortgage, or seeking housing assistance.

For that reason, your real estate agent may advise against writing an offer letter. Instead, they may suggest that you choose another strategy for making your offer on a house more attractive.

How Long Should a House Offer Letter Be?

If you do decide to write an offer letter, the letter should be short and succinct. One page is plenty. And if your bid isn’t competitive enough to be on the seller’s radar in the first place, the offer letter probably won’t even be read.

What Should Not Be Included in a House Offer Letter

Perhaps even more important than what you write in your offer letter is what you should not include. Stay away from:

•   Overly saccharine statements. Sellers may get overwhelmed by buyers who are too profuse about their love for the property. Be complimentary, but don’t overdo it.

•   Letters that are too long. The seller doesn’t need to know everything you love about the house. Offer letters are more effective when they’re a page or less.

•   Too much personal detail. If you mention your partner or children, be aware that familial status is protected against discrimination under the Fair Housing Act. It’s wise not to share too much.

•   A picture of yourself or your family. This is another red flag. Race and gender, among other things, are protected against discrimination under the Fair Housing Act.

💡 Quick Tip: Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

How Do You Write a Strong Offer Letter?

First, make sure your home contracts offer is strong. You want to submit a strong offer before you work on a letter.

Then, when you sit down to write the letter, consider this: If you were having a conversation with your seller about the house, what would you want to tell them? Explain briefly why you love the home, and thank them for considering your offer. Keep the focus of the letter on the house, and avoid giving too many personal details. Use a friendly tone, and be genuine and sincere.

Keep the letter to one page or less.

Recommended: Guide on How to Save Money for a House

Tips for Buying a Home

Rather than an offer letter, you may want to consider one of the following strategies instead:

•   Submit a higher offer. Winning a bidding war often comes down to one factor: price. Offering a higher price for the house is an option to think about. You might also want to add an escalation clause, which can automatically increase your offer above other offers.

•   Offer all cash. That is, if you have the resources to do this. Data from Redfin suggests buyers who offer all-cash are two to four times more likely to be chosen.

•   Waive the financing contingency. Waiving this contingency could potentially increase your odds of winning the contract over other buyers, according to Redfin. Keep in mind, however, that waiving the financing contingency means you forfeit your earnest money if you can’t get financing before the contract deadlines.

And, finally, if you’re a first-time home buyer, you may want to look into first-time homebuyer programs that could be helpful to you in your quest to buy this particular home — or any home.

The Takeaway

Offer letters have become popular in recent years as the real estate market has heated up, but these letters do have drawbacks. They could even run the risk of violating the Fair Housing Act. Discuss it with your real estate agent and weigh the pros and cons carefully before writing an offer letter.

Also, consider other options that might help improve your chances of becoming a homeowner. For instance, you may decide that offering a higher price on the house, getting preapproved for a mortgage, or being flexible about the closing date is a better way to go.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

How do you write a strong offer on a house?

In addition to making a strong offer on a house, you can write an offer letter. To write a strong offer letter, focus on the property. Tell the seller why you love the home, and thank them for considering your offer. Use a friendly tone, be genuine and sincere, and keep the letter to one page or less.

How to write an offer letter for a house for sale by owner?

In a house that’s for sale by owner, you’re likely dealing directly with the seller. In that case, you can address the seller by name in the letter and tell them why you like the house. Also, if you know there’s something they’re looking for, like a quick transaction, you could indicate that you’re flexible with the closing date. And if you’re preapproved for a mortgage, you could mention that as well.

How do you write a good offer letter?

Be succinct, genuine, and sincere in your offer letter. Focus on the house and why you like it, and avoid giving personal details. Thank the owner for considering your offer.

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Photo credit: iStock/Gorica Poturak

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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A VA (Veterans Affairs) home mortgage loan offers qualified people with a military background the opportunity to get financing to buy a home.

Who qualifies for a VA loan? There are several requirements individuals generally need to meet to qualify for a VA loan. These include a history of military service, passing a credit check, and receiving a Certificate of Eligibility. They must also plan on using the home as their primary residence.

What Is the VA Home Loan Program?

If you’re wondering, what is a VA loan?, here’s what you need to know: The VA Home Loan Program aims to increase access to home mortgages to people who have served in the military. The U.S. Department of Veterans Affairs created the program for qualified veterans, active-duty service members, and some surviving spouses.

The VA pays a percentage of the loans, lowering risk for lenders so they can offer better rates and terms.

This program not only assists veterans in achieving their dream of homeownership, but also promotes stability and financial security for those who have served their country. Whether purchasing a first home or doing a mortgage refinance, eligible veterans and their families can take advantage of this opportunity to enjoy affordable and accessible financing.


💡 Quick Tip: You deserve a more zen mortgage. Look for a mortgage lender who’s dedicated to closing your loan on time.

Pros and Cons of a VA Home Mortgage Loan

As is the case with many different types of mortgage loans, VA home mortgage loans have benefits and disadvantages borrowers should be aware of before applying. These include:

Pros

•   No down payment: One of the main advantages of VA loans is that they don’t require a down payment.

•   Lower interest rates: VA loans often have lower interest rates than other types of mortgage loans.

•   No private mortgage insurance (PMI): With conventional loans, if you make a down payment that’s less than 20% of the purchase price of the home, you may have to buy PMI. With a VA loan, there’s no PMI requirement which can help buyers, especially first-time homebuyers, save money.

•   Flexible credit standards: VA loans typically have less stringent credit requirements than other types of loans. Borrowers can even qualify after a foreclosure or bankruptcy under certain conditions.

•   Streamlined refinancing: The VA has a refinancing program called the Interest Rate Reduction Refinance Loan (IRRRL).

•   Lifetime benefit: Veterans can use the program at any time.

Cons

•   Funding fee: VA loans come with a one-time financing charge that helps taxpayers cover the costs of the loan program. The amount of the fee depends on the size of the down payment, the type of military service performed, and other factors. Certain veterans, including those who are disabled, do not have to pay the fee.

•   Limited to primary residences: VA loans can only be used to buy a first home or primary residence, they can’t be used to buy a second home or investment property.

•   Potential seller limitations: Not all sellers or agents understand the VA loan program or want to work with VA loan borrowers. This may make negotiations harder and limit which houses can be purchased.

•   Additional property requirements: There are special criteria that properties must meet to ensure they are physically sound, clean, and secure.

•   VA loan limits: There are lending limits that determine the maximum loan amount the VA will guarantee. These may differ depending on the state and county.

Recommended: Cost of Living By State

What Are the Eligibility Requirements for VA Home Loan Programs?

Who qualifies for a VA home loan? The Department of Veterans Affairs sets the eligibility requirements for VA home loan applicants. Generally, to qualify for a mortgage in this case, borrowers must meet prerequisites such as proving their military service history, receiving a Certificate of Eligibility, and passing a credit check. Eligibility requirements are different depending on the type of service performed.


💡 Quick Tip: A VA loan can make home-buying simple for qualified borrowers. Because the VA guarantees a portion of the loan, you could skip a down payment. Plus, you could qualify for lower interest rates, enjoy lower closing costs, and even bypass mortgage insurance.†

Minimum Active-Duty Service Requirements

The VA loan eligibility requirements differ depending on the type of military service performed, as follows.

Service Members

Active-duty service members are eligible for the VA loan program, but may have different requirements than veterans. Service members must have served for at least 90 days continuously in order to meet the minimum active-duty service requirement.

Veterans

Veterans will meet the minimum active-duty service requirement if they served for one of the following:

•   At least 24 continuous months

•   The full period (at least 90 days) of active duty

•   At least 90 days if discharged for a hardship, or a reduction in force

•   Less than 90 days if discharged for a service-connected disability

National Guard Members

National Guard members must have served on active duty for a minimum of 90 days straight

Reserve Members

Generally, reserve members are required to have served on active duty for a minimum of 90 days straight during wartime. Or they may qualify if they have served for more than six years.

How to Request a Certificate of Eligibility (COE)

There are several steps you’ll need to take to get a Certificate of Eligibility. Here’s how to do it.

1.    First, check your eligibility with the VA. Your military service record will need to show that you served for a certain amount of time as indicated above.

2.   Next, provide other documents and information, including your Social Security number, proof of service such as dates of service and discharge papers, and a marriage and death certificate for surviving spouses.

3.   Apply for a certificate on the VA’s eBenefits online portal. You can also request a COE through a VA-approved lender.

Recommended: Home Loan Help Center

What If You Don’t Meet the Minimum Service Requirements?

There are alternative mortgage loan programs you can apply for if you don’t meet the minimum service requirements for a VA loan. These options include:

•   Federal Housing Administration (FHA) loans. These may have more lenient credit score criteria than VA loans and could be a good choice for first time homebuyers.

•   Conventional loans provided by private lenders, such as banks, credit unions, and online lenders. You may need a higher credit score to qualify for these loans.

•   State and city homebuyer aid programs and grants that provide support for down payments, closing costs, and other types of support.

You may also want to consider strengthening your credit score and saving up money for a downpayment in order to qualify for a loan in the future.

The Takeaway

The VA loan program is designed to help eligible veterans, active-duty service members, and surviving spouses qualify for a home loan. Key benefits of the program include no down payment required, low interest rates, and flexible credit requirements.

If you’re looking to take out a mortgage to buy a home or to refinance your current mortgage, there are other loan options you can consider as well.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Who are eligible borrowers on a VA loan?

Eligible borrowers on a VA loan include veterans, active-duty service members, and some surviving spouses. Eligibility depends on length of service performed and the type of home being purchased, among other factors.

What is the major criteria for a VA mortgage?

The major criteria for a VA loan is the individual’s type and duration of military service and their creditworthiness. Also, the applicant needs to show that they have enough income to meet the monthly mortgage payments.

How long do you have to serve in the military to get VA benefits?

Service duration requirements for VA benefits depend on the type of service, but generally one must have served for at least 90 days in a row. For certain situations such as service during wartime, the 90-day requirement may be reduced to as little as 30 days of consecutive military service to be eligible for VA benefits.

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Photo credit: iStock/CatLane

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

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If you own an Airbnb property or are contemplating offering one on the popular rental platform, you probably know that doing so can bring in a welcome stream of income. You also probably know that it can take time and energy to keep things running smoothly. Guests may cancel at the last-minute; your property’s dishwasher might break; and an array of other scenarios may arise, demanding your attention.

In this situation, you might want to find a cohost to assist you. A cohost can simplify the process by assisting with bookings, housekeeping, answering guests’ questions, and more responsibilities.

A cohost could be a friend or family member, a person you find and pay for their services, or a professional with whom Airbnb connects you.

Here, you’ll learn more about this option including:

•   What is Airbnb?

•   How does Airbnb work?

•   How does Airbnb work for hosts?

•   How to become an Airbnb cohost?

What Is Airbnb?

Airbnb is an online marketplace for private home stays (whether that means renting out a room, a floor of a house, or a whole property) as well as vacation experiences.

How does Airbnb work for hosts? Owners sign up to rent out a room, apartment, or house for a home stay. (Even treehouses turn up among the properties.) The hosts set their rates, and share their rental policies. Guests can then book via the Airbnb platform, which assists with communications and administrative tasks for a commission.

More than four million hosts now operate worldwide, with over 150 million users globally who have booked over one million stays. It’s a proven platform for coaxing an income stream out of any property, and it can be an enticing endeavor for first-time homebuyers.


💡 Quick Tip: You deserve a more zen mortgage. Look for a mortgage lender who’s dedicated to closing your loan on time.

Who Books on Airbnb?

All kinds of people book on Airbnb: Recent grads, families, retirees, wedding guests, digital nomads, and more. Both frugal travelers and posh jetsetters alike are looking for lodging. Many people prefer the authenticity of an Airbnb to a cookie-cutter hotel or motel room.

How does Airbnb work for guests? They search for and book a property based on location, price, available dates, and desired amenities, among other factors.

When potential guests submit inquiries, owners receive immediate notification of the reservation request. Airbnb has technology in place to block guests with a record of negative behavior (such as property damage) from reserving properties.

How Does Airbnb Work for Owners and Cohosts?

There are many things to know when renting out an Airbnb. Here’s how Airbnb works for owners: Those who list new properties on Airbnb receive step-by-step instructions for setting up their space. They can be matched with a successful Superhost (that’s Airbnb’s term for highly rated and reliable hosts) to assist them.

If you bring aboard a cohost, they will be verified by Airbnb (submitting ID may be required). Once approved, they will have full privileges to help you with managing and optimizing your listing(s). Tasks can include:

•   Managing booking and reservation-related tasks

•   Answering prospective and current renters’ questions

•   Stocking and otherwise maintaining the property

•   Updating the listing as needed

•   Enhancing guests’ experience.

Recommended: Is It Smart to Buy an Investment Property While Renting?

How Much Do Airbnb Owners Get Paid?

If you are offering a property for rent on Airbnb, you are probably interested in turning a profit. So how does Airbnb payment work? The price you charge for your property and the number of nights you book will determine how much you earn.

If you consider this in more detail, the income from an Airbnb depends on a variety of factors, including the size of the property for rent, amenities (does it have a spa-style bathroom? A swimming pool?), the tourism market, local housing market trends, and the number of other Airbnbs you’re competing with.

Looking at the Airbnb site and sizing up your competition can help you determine how much to charge and how rates vary over the year.

In terms of how much Airbnb owners get paid of the amount renters pay, consider that most hosts pay a service fee of 3% of the rental subtotal (the nightly cost plus any fees you charge guests, such as cleaning charges). Airbnb doesn’t charge its hosts a payment processing fee.

In addition, guests usually pay Airbnb a 14% service fee on top of the subtotal.


💡 Quick Tip: A home equity line of credit brokered by SoFi gives you the flexibility to spend what you need when you need it — you only pay interest on the amount that you spend. And the interest rate is lower than most credit cards.

How to Become an Airbnb Owner with a Cohost

Want to launch your property on Airbnb with the help of a cohost? The platform makes it simple:

•   Go to the listing(s) where you’d like to add a cohost.

•   Click on “Cohosts” and then “Invite a Cohost.”

•   Add their location and their email or phone number, and click “Next.”

•   You’ll be prompted to select permissions for this person; then click “Next.”

•   You can add a note if you like, and then hit “Send.”

Airbnb will then handle inviting and verifying the cohost and adding them to your listing. You can have up to 10 cohosts per listing.

In terms of how to become an Airbnb cohost, the person you’ve invited will likely have to accept your invitation and then provide information and ID to Airbnb.

Airbnb Owner Requirements

Here are some of the owner requirements to offer a property as a rental on Airbnb:

•   Be of legal age. Perhaps it goes without saying, but minors shouldn’t be involved in renting out properties on the platform. While it may sound like a cool summer project for a teenage cousin to help manage a family lakehouse, that would be a no-go.

•   Make sure renting your property is legal. Depending on the home’s geographical area, a host may need to register the property or obtain a short-term rental license. Or you may not be allowed to rent out your property at all. A call to your city hall may be the best way to learn the details.

•   Know the tax implications. In some tax areas, Airbnb will handle the calculation, collection, and remittance of any local occupancy taxes on your behalf. In other locations, you may be responsible for this.

•   Cover yourself. Hosts should understand the liability insurance that Airbnb automatically applies to rentals. Hosts may want to also confirm that their homeowners’ insurance policy provides coverage for short-term rentals.

Recommended: What Is the Cost of Living by State?

Pros and Cons of Being an Airbnb Owner

As you consider becoming an Airbnb host with a cohost or without, you may want to review the benefits and disadvantages of renting in this way.

Pros of Being an Airbnb Owner

Are you thinking about how to become an Airbnb host for others? Among the upsides to consider are the following:

•   Hosting short-term rentals can bring in cash. This can help ensure you’ll have resources to make your home loan payments.

•   Income from rentals can fund renovations and other improvements, or it could help finance your long-term financial goals.

•   A successful rental history can increase the value of your property when you’re ready to sell.

•   Many people find hosting a rewarding activity, both as a business and a personal pursuit.

Cons of Being an Airbnb Owner

Here are some of the downsides of being an Airbnb owner:

•   It can be a big leap to give total strangers the key to your home. For instance, if the property is your primary residence, you will have to vacate for bookings. If your home contains treasured furniture or tableware, you may worry about damage.

•   Some cities, towns, and homeowners associations have passed legislation against short-term rentals.

•   Owners who rent their properties, even a few days a month, must pay taxes on the earnings.

•   While Airbnb provides insurance coverage automatically to hosts, you may want to make sure your homeowners insurance can cover short-term rentals as well.

•   It can be a time-consuming endeavor, and some people may find being a host to be frustrating in some ways.

Writing an Airbnb Host Listing

A successful Airbnb host listing is typically a combination of an enticing portrait of your property and all the vital, nitty-gritty details.

Usually, the listing will share:

•   A short introduction, which delivers an overview and highlights why it’s a terrific property

•   Room-by-room descriptions

•   Details about the property/outdoor features

•   Information about the location and things to do nearby.

Be sure to define terms that bookers may not know, such as what is a duplex or pergola.

Tips on Hosting on Airbnb as an Owner with a Cohost

Here are some ways to collaborate with a cohost:

•   Have your cohost manage the calendar, set holiday/peak rates, and answer questions.

•   Ask your cohost to share ideas for area attractions that draw guests. Mention these in your listing, including distances from your property.

•   Talk to your cohost about personal touches they think would please guests, like sharing a list of good local restaurants that don’t require reservations.

•   Ask your cohost to create house rules and determine how to share and enforce them with guests.

•   Have your cohost review the property and highlight anything that needs maintenance or that could be improved.

•   Give your cohost the job of restocking the property after each guest stay.

The Takeaway

If you’re considering offering a property on Airbnb or are already doing so, a cohost could make the management easier. A cohost could be a family member who helps out for free, or they could be a paid professional who manages a number of Airbnb rentals and has considerable experience. A cohost could help you boost the success of your hosting on this popular platform.

Are you just pondering becoming an Airbnb host and currently eyeing the perfect bungalow to rent out? Finding the best mortgage for your purchase is an important step.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What percentage does Airbnb take?

Airbnb typically collects a flat service fee of 3% of the rental fee subtotal. In addition, the guest pays Airbnb a 14% fee directly.

How much do owners have to pay Airbnb?

Airbnb will deduct a 3% fee from a rental subtotal (which includes the nightly fee, plus any other fees the host charges, such as a cleaning fee).

Do Airbnb hosts get all the money?

Here’s how Airbnb payment works: Airbnb hosts do not get all the money. They typically pay 3% of the subtotal (nightly plus other fees) to Airbnb and then get the rest. Airbnb doesn’t charge any payment processing fees.

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Photo credit: iStock/AJ_Watt

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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If you’re a qualifying veteran, active military service member, or surviving spouse, a VA loan can be an incredible boon on your homeownership journey: It unlocks the opportunity to buy a house with zero down payment required, limited closing costs, competitively low interest rates, and no private mortgage insurance (PMI). What’s more, those who are eligible can take advantage of this benefit as many times as they like. There’s no limit to how many times you can use a VA home loan.

Here’s a closer look at this special and valuable option available to U.S. veterans and their families.

What Is a VA Loan?

Before we dive into how many times can you use a VA loan, let’s start with defining what a VA loan is in the first place.

VA loans are a type of mortgage that are offered by private banks, but backed by the U.S. Department of Veterans Affairs (VA). Because this type of loan is less risky for lenders, banks are able to offer much more favorable terms, including the ability to buy a home without making a down payment.

That means VA loans lower the barrier to entry for all buyers, but especially for first-time homebuyers, who usually find that saving up enough money for a down payment is one of the biggest challenges when it comes to breaking into property ownership. Even better, the cost of your mortgage won’t be inflated by PMI, which most lenders and mortgage programs require whenever a buyer puts less than 20% down. (You will most likely pay a one-time funding fee; more on that later.) There are other special advantages of a VA loan, so if you are considering one, take the time to learn all the ins and outs of how a VA loan works.

Recommended: The Cost of Living by State

How Many Times Can You Take Out a VA Loan?

It almost sounds too good to be true, but it’s not: You can take out a VA loan as many times as you like — as long as you’re eligible for one and you still have remaining entitlement, which we’ll get to in a moment.

In order to apply for a VA loan, you’ll need to first acquire a Certificate of Eligibility, or COE, from the VA. Specific requirements vary depending on which branch of the military you served in, when you served, and a few other factors. (Full details are available directly from the VA.)

How Many VA Loans Can You Have?

There’s no specific limit on how many VA loans you can take out. Some veterans have taken out two, three, or even eight or more! These are typically sequential loans. You wouldn’t be able to use a VA loan to purchase a second home or vacation home, as VA loans are for primary residences (the one exception to this rule is active-duty members who have received a permanent change of service, or PCS, which we will discuss below).

There is one important factor that can, in some instances, limit an eligible veteran or service member’s ability to take out a new VA loan: entitlement.

💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show the real estate agent proof that you’re preapproved for a mortgage. SoFi’s online application makes the process simple.

What Is a VA Loan Entitlement?

As noted above, VA home mortgage loans are backed by the VA. Essentially, the VA promises to pay the bank a certain dollar amount if the borrower — that’s you, the veteran — defaults on the mortgage. That dollar amount is known as your entitlement.

The entitlement is the amount the VA guarantees your lender they’ll receive if you stop paying your loan. Basic entitlement is $36,000, but these days, that’s a very small fraction of most home loans — which is why the VA also offers bonus entitlement, which guarantees the lender the VA will repay 25% of a loan amount over $144,000 if you default.

Full Entitlement

If this is your first time using a VA loan, or if you paid off a previous VA loan in full and then sold the house, you have full entitlement — though the total amount of money you can borrow will still be limited by factors that typically determine whether you will qualify for a mortgage, such as your credit history, income, and assets.

Reduced Entitlement

If you already have an active VA loan, paid off a VA loan for a home you still own, refinanced the VA loan you took out on a home you still own, or had a foreclosure and didn’t pay back the VA in full, you may have reduced entitlement.

Reduced entitlement limits the amount the VA will guarantee to your lender in the event that you default. The limit is the conforming loan limit in your area, minus whatever amount of entitlement you’ve already used. If you have reduced entitlement, you may be required to make a down payment.

Calculators are available online to help you determine how much entitlement you have left, but essentially, the equation is this: your maximum entitlement (one quarter of your county’s conforming loan limit) minus the entitlement you’ve used (one quarter of the VA loan you’ve already taken out) equals your remaining entitlement. Here’s the formula:

Conforming loan limit ÷ 4 = maximum entitlement

Existing loan amount ÷ 4 = entitlement you’ve used

Maximum entitlement – entitlement you’ve used = remaining entitlement

Recommended: How Government-Backed Mortgages Work

When You Might Have More Than One VA Loan at a Time

All of this begs the question: Why would you have more than one loan at a time, anyway? One home, one loan, right?

Well, if you’re an active-duty military member, you might receive permanent change of service (PCS) orders, which would require you to move to a new duty station — and therefore find new housing. Under those circumstances, you might have two active VA loans at one time.

Pros and Cons of Taking Out a Second VA Loan

If you’re taking out a second VA loan to fund a home purchase, there are both drawbacks and benefits to consider.

Pros:

•   If your remaining entitlement is high enough, you may still be able to avoid making a down payment

•   You will still benefit from other VA benefits, including competitive low interest rates and easier qualification standards

Cons:

•   If you don’t have enough remaining entitlement, you may still be required to put a down payment on the home — though possibly less of one than you would have otherwise

How to Take Out a Second VA Loan

To take out a second VA loan, you must get approved for the loan by a qualified VA lender. The first step is to determine how much remaining entitlement you have, as this will illuminate how much house you can afford to purchase — and how large of a down payment you’ll be required to make, if any. (Remember, your new home loan must be for a primary residence, so you can’t take out a second VA loan to fund a vacation home or investment property.)

💡 Quick Tip: Backed by the Federal Housing Administration (FHA), FHA loans provide those with a fair credit score the opportunity to buy a home. They’re a great option for first-time homebuyers.

Tips on Taking Out a Second VA Loan

Your lender will give you step-by-step instructions on how to apply for a second VA loan, including which documents and identification you’ll need to supply to prove your income, credit history, and more. Keep in mind that your remaining entitlement will determine how much money you’ll need to put down at closing. If you explore the second VA loan and aren’t sure it is right for your situation, consult a home loan help center to learn about more options.

The Takeaway

How many times can you use a VA home loan? While there’s no limit to how many VA loans you can take out in one lifetime, entitlement does limit how much the VA backs those loans for lenders involved — and could limit your ability to qualify for a no-down-payment VA loan.

SoFi offers VA loans with competitive interest rates, no private mortgage insurance, and down payments as low as 0%. Eligible service members, veterans, and survivors may use the benefit multiple times.

Our Mortgage Loan Officers are ready to guide you through the process step by step.

FAQ

Is there a limit on how many times you can use a VA loan?

No — you can use your VA loan benefit as many times as you would like in your lifetime. However, your entitlement, or the amount of money that the VA pledges to back the loan for the lender, can be reduced if you’ve already taken out a VA loan.

Can a VA loan be used multiple times?

Yes — you can use your VA loan benefit multiple times. Your amount of entitlement can change the qualification process, however. If you have reduced entitlement, you may be required to make a down payment on the new loan.

How soon after using a VA loan can you use it again?

While there’s no specific time limit, VA loans can only be used for primary residences, and your entitlement will likely be reduced if you’re still living in the home you purchased with your original VA loan.

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Photo credit: iStock/LumiNola

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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When comparing different types of mortgages, there are some great reasons to consider a loan from the U.S. Department of Veterans Affairs (VA) if you’re eligible for one. Some of the best VA loan benefits include no down payment requirement, no private mortgage insurance, and the potential to get a lower interest rate.

There are, however, some advantages to getting a conventional loan instead even if you qualify for VA financing. Comparing the benefits of a VA loan vs. a conventional mortgage can help you decide which one might be right for you.

Comparing VA Loans vs. Conventional Loans

If you’re a first-time homebuyer, it’s good to know a little about different types of mortgages and how they work. VA loans and conventional loans can both help you to buy a home, but one might be a better fit than another, depending on your financial situation.

Conventional Loan

A conventional loan is a home mortgage loan that’s not backed by the federal government. Examples of government-backed loans include VA loans and Federal Housing Administration (FHA) loans, which are designed to make buying a home more affordable for first-time buyers. Conventional loans can be conforming, meaning they meet standards set by government entities Fannie Mae or Freddie Mac, or non-conforming.

Conventional loans might be what you automatically think of when discussing mortgage loans. You can get a conventional mortgage from a traditional bank or credit union, but you can also find them offered through online lenders. Conventional mortgages typically require a down payment, which is money you pay upfront to reduce the amount you need to borrow.

VA Loan

What is a VA loan? A VA loan is a loan that’s backed by the federal government. The Department of Veterans Affairs operates the VA loan program to help eligible military members and their surviving spouses purchase affordable housing. Borrowers can get a loan through an approved VA lender to buy a home, build a home, or pursue a mortgage refinance.

If a borrower defaults on a VA loan, the government steps in to help the lender recover some of its losses. This is one of several VA loan benefits. With a conventional loan, the lender can’t call on the government to get any of its money back if the borrower fails to pay what’s owed.

Mortgage Requirements for VA Loans vs Conventional Loans

What are the benefits of a VA loan vs. conventional loan? A lot of the main advantages center around what’s needed to qualify and what you’ll pay as a borrower. Here are some of the main mortgage requirements to know when looking at the benefits of VA loan financing side by side with conventional loans.

Credit Score

Lenders can use your credit score to qualify you for a mortgage and your credit history can also influence the rates you pay for a home loan. One of the main benefits of using a VA loan to buy is that the VA program does not have a minimum credit score requirement. That could make a VA loan attractive for borrowers with less-than-perfect credit.

However, VA-approved lenders may set their own minimum credit score requirements for loans. Of course, lenders can do the same for conventional mortgages. Generally speaking, a good credit score for a mortgage is usually 620 or higher, though the better your score the easier it may be to get approved.

Down Payment

Putting money down on a home reduces the amount you need to borrow and if you’re getting a conventional loan, it may help you to avoid private mortgage insurance (PMI). PMI is insurance that covers the lender in the event that you default on your loan and it’s typically required for conventional loans when you put less than 20% down.

The VA, however, doesn’t require a down payment for loans. That’s one of the nicer VA loan benefits for homebuyers, since you don’t have to part with a large chunk of cash all at once. Instead, you could save your money to buy new furniture, make improvements to your new home, or pad your emergency fund so that you’re prepared in case the roof springs a leak or you need to replace your water heater.

Debt-to-Income Ratio

Your debt-to-income ratio or DTI reflects the amount of your income that goes to debt repayment each month. For conventional home mortgage loans, a good DTI is 36% or less, though it’s possible to find lenders that will work with you if your DTI is above that amount.

With VA loans, it’s possible to get approved with a DTI of up to 41%. However, having a higher DTI could make it more difficult to keep up with your mortgage payments. For that reason, it’s a good idea to work out a detailed home buying budget to determine how much you can afford without straining yourself financially.

Private Mortgage Insurance

As mentioned, private mortgage insurance is a feature that can be included in a conventional mortgage if you put less than 20% down. Premiums are added into your monthly mortgage payment and once your equity reaches 20%, you can request to have PMI removed from your loan. Lenders are supposed to drop PMI automatically once your mortgage balance reaches 78% of the home’s original value, assuming you are up to date on your payments.

One of the benefits of a VA home loan is that you don’t have to worry about any of that. There is no PMI for these loans, so you don’t have to factor in any added costs when estimating how much your monthly mortgage payments will be.

Property Eligibility

VA home loans can be used to purchase a variety of home types, including:

•   Single family homes with up to four units

•   Condos in a VA-approved project

•   Manufactured homes

The VA loan program requires a home inspection and an appraisal to make sure that the home is structurally sound and that its value is compatible with the amount that you want to borrow. If a home has any obvious defects, such as a cracked foundation, you may need to get an additional inspection from a certified engineer in order to move ahead with the loan.

VA loans are designed for purchasing primary homes. In other words, you can only get one for a home you plan to live in. Conventional loans, on the other hand, can be used to purchase a primary home, second home, or investment property. While an appraisal is required for a conventional loan, an inspection may be optional if the lender allows.

Borrower Fees

When you get a conventional loan, you’ll typically pay 2% to 5% of the purchase price in closing costs. Closing costs cover things like attorney’s fees, mailing fees, and recording fees. You’ll need to bring a check to closing or wire the amount to your closing attorney to pay those fees, along with your down payment.

A VA lender can also charge closing costs and borrowers must usually pay a VA funding fee as well. This fee is used to cover the costs of the VA loan program and it’s paid just once. The amount you pay for a VA loan funding fee depends on whether you’re a first time homebuyer or repeat buyer and how much money you put down, if any.

Additional Requirements to Consider

Aside from having a good credit score and steady income, there’s one more thing you’ll need to qualify for a VA loan. Borrowers are expected to produce a Certificate of Eligibility (COE) demonstrating that they’re eligible for the VA loan program.

Veterans, service members and surviving spouses can apply for a COE online through the VA website. To get your COE, you must be able to meet minimum duty and service standards. If you’re currently on active duty, you’ll need to get a statement of service from your commander, adjutant, or personnel officer.

If you don’t meet the service requirements for a COE, you may still be able to qualify if you were discharged. Exceptions are also made for the spouses of veterans and for people who served in certain organizations. However, if you’re not able to meet those requirements then you’ll need to consider another home loan option.

Recommended: Cost of Living by State

Pros and Cons of a VA Loan vs a Conventional Loan

The benefits of a VA mortgage loan are undeniable, particularly for first-time buyers who may not have a lot of cash to put toward a down payment. To recap, here are the main VA home loan benefits to know, as well as some of the cons, when comparing them to conventional financing options.

	VA Loans	Conventional Loans
Pros	No down payment requirements. No private mortgage insurance. Potentially lower interest rates.	No VA funding fee. Skip PMI if you can put down 20% or more. Purchase a primary home or investment property.
Cons	VA funding fee is usually required. Appraisal and inspection are required. Properties must be eligible for a loan.	PMI can add to total home-buying costs. Interest rates may be higher. Higher credit score may be required to qualify.

How to Choose the Right Mortgage For You

Weighing the benefits of VA loan financing against conventional loans is important when it comes to choosing the best loan option. If you meet the criteria for a VA loan, then you might consider prequalifying for this type of mortgage first to see what kind of rates and terms you’re eligible for.

On the other hand, if you’re ineligible for a VA loan because you don’t have a COE or you can’t meet a lender’s credit requirements, then a conventional loan might be best. Visit a home loan help center to explore more options.

With any mortgage, it’s helpful to consider:

•   Interest rates and what you might pay

•   Repayment terms

•   Closing costs and other fees

•   Appraisal and inspection requirements

•   Down payment requirements

•   Funding speed

It’s also to your advantage to make yourself as creditworthy as possible before applying for a home loan. Some of the best tips to qualify for a mortgage include paying down existing debts to reduce your debt-to-income ratio, making sure you’re paying all your bills on time, and holding off on applying for other loans or lines of credit.

Recommended: Cost of Living in California

The Takeaway

There are several VA home loan benefits. Getting a VA loan could save money if you’re able to get a lower interest rate and avoid making a large down payment. Conventional loans, on the other hand, are still worth a look, especially if you want to buy a second home or an investment property.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What is the advantage of a VA loan vs a conventional loan?

VA loans do not require a down payment or private mortgage insurance. Conventional loans may require a 20% down payment to avoid PMI. VA loans may also have lower interest rates for qualified borrowers.

Are VA rates better than conventional?

VA loans can have lower interest rates than conventional loans, which could save you some money as a homebuyer. The interest rates you’re able to qualify for with a VA loan vs. conventional loan can depend largely on your credit scores and credit history.

Why do sellers prefer conventional over VA?

Home sellers may prefer to sell to buyers who have conventional loan funding simply because VA loans tend to have stricter requirements when it comes to the property itself. Buyers must be able to get the home appraised and inspected in order to move ahead with a VA purchase loan.

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Photo credit: iStock/designer491

^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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