Using A VA Loan For An Investment Property (2024)

FAQs

Can a VA loan be used for investment property? ›

Keep in mind that if you use a VA loan to purchase an investment property, you must treat that property as your primary residence. You can rent out a bedroom or even a guest house, but you'll need to live there to meet VA guidelines.

Unacceptable uses. The VA wants veterans using this program for primary residences. You can't purchase or build a vacation home or a purely investment property with a VA loan. New construction is possible, but veterans can't simply purchase a plot of land with the intent to build a home some day.

The good news is you can buy a duplex, a triplex or a four-plex using your VA home loan benefits. However, the property purchased cannot be used solely for investment or rental purposes, and one unit must be your primary residence.

Investment Properties are Fair Game

However, if you are a non veteran buyer, you can purchase a home and assume a VA loan for an investment property!

VA cash-out refinancing is only valid for primary residences. Second homes and investment properties are not eligible and must be covered under different types of home loans.

Rent Your Home After 12 Months

If you've lived in your home for a year – or you've been assigned to a new duty station before the 12-month benchmark – you can rent out your VA loan-financed house. Your tenant won't need to be a service member or veteran who qualifies for a VA loan.

Note: We require that a seller can't pay more than 4% of the total home loan in seller's concessions. But this rule covers only some closing costs, including the VA funding fee.

Can a VA loan be used for an ADU? Cash-out refinancing may be a viable lending option for homeowners who qualify for a VA loan and are looking to finance an ADU. The VA will guarantee these loans up to 100% of the home's value. VA loans are also not subject to down payment limits or private mortgage insurance (PMI).

How Many VA Loans Can You Have? VA loans can only be used to purchase primary residences, and they come with occupancy requirements to ensure that this is how the loan will be used. That being said, it is possible to have two VA loans at one time for two different primary residences.

VA loans can be used to purchase properties with up to four residential units, provided the veteran intends to occupy one of the units as their primary residence. This stipulation is crucial; a VA loan cannot be used to purchase investment properties that the veteran does not intend to occupy.

Can I use VA loan to purchase a second home? ›

Yes, you technically can use a VA loan for a second home.

VA mortgages even come with specific occupancy requirements to help ensure that the homes they guarantee are inhabited for most of the year. Specifically, you'll have 60 days — in most cases — to move into your new property and start living in it full time.

About VA Loan Limits

The standard VA loan limit in 2024 is $766,550 for most U.S. counties, increasing from $726,200 in 2023. VA loan limits also increased for high-cost counties, topping out at $1,149,825 for a single-family home. VA loan limits do not represent a cap or max loan amount.

VA loans offer many benefits such as no down payment or mortgage insurance, easier qualifications and lower interest rates. However, they also have drawbacks such as a required funding fee, property restrictions and potentially less equity to start.

If you transfer a property with a VA loan to an LLC, the LLC is now the owner of the property. The VA does not recognize such entities as eligible borrowers so now using what's known as the VA streamline refinance may have just become a problem for you.

Down payment: A VA home loan typically doesn't require a down payment. But the new borrower may need to make a down payment in some cases. Income: You'll need to have enough income to support the loan amount.

If you want to use a VA loan for an investment property, you must meet the VA's occupancy requirements. These mandate that you must use the property as your primary residence, move in within 60 days after closing and live in the home for at least 12 months.

Normally, if you have paid off your prior VA loan and disposed of the property, you can have your used eligibility restored for additional use. Also, on a one-time only basis, you may have your eligibility restored if your prior VA loan has been paid in full but you still own the property.

Getting a second VA loan on a different home is possible. It often happens when an active service member receives Permanent Change of Station orders. However, a VA-approved lender must approve you having multiple loans. Essentially, you'll need to show that you have the means to repay both loans at once.

In some cases a borrower using a VA loan may be able to use the existing or projected income from the property being purchased to help meet the income requirements a lender has for a borrower. A lender will generally count 75% of a property's rental income as part of a borrower's total income.