The VA home loan is a mortgage loan program designed to help veterans, active-duty service members, and their eligible surviving spouses buy, build, or improve a home. However, many veterans wonder if they can use the VA home loan to invest in real estate.
The short answer is yes, but some limitations and requirements must be met. Let’s explore the rules and regulations governing using VA home loans for real estate investing.
VA Home Loan Eligibility Requirements
First, it’s essential to understand that the VA home loan program is intended for personal, owner-occupied homes. According to the VA, the program’s primary purpose is to “provide home financing to eligible veterans in areas where private financing is not generally available.”
The VA also stipulates that the property financed with a VA home loan must be the borrower’s primary residence. The VA loan cannot be used to purchase investment properties, vacation homes, or rental properties.
Advantages of Using a VA Home Loan for Real Estate Investing
However, a potential loophole may allow veterans to use the VA home loan for real estate investing. The VA will enable borrowers to purchase multi-unit properties, such as duplexes, triplexes, and fourplexes, with VA loans as long as they plan to occupy one of the units as their primary residence.
For example, a veteran could purchase a fourplex with a VA loan and live in one unit while renting out the other three units. This strategy can be an excellent way for veterans to start building their real estate investment portfolio while still taking advantage of the VA home loan program.
Understanding Multi-Unit Properties
Another important consideration is the VA’s occupancy requirement. Borrowers must occupy the property within 60 days of closing and maintain occupancy for at least one year. This means that veterans cannot purchase a multi-unit property, live in it for 60 days, and then rent out all units.
Additionally, the VA has strict guidelines regarding multi-unit properties’ appraisal and inspection processes. The property must meet specific standards for safety, soundness, and livability. The VA also requires that each unit be individually metered for electricity and gas.
It’s also worth noting that the VA home loan program has certain limitations on how much financing can be provided. In 2022, the maximum amount that can be borrowed with a VA loan is $1.5 million. Still, this amount can vary depending on the property’s location and other factors.
While the VA home loan program is primarily designed for personal, owner-occupied homes, some options exist for veterans who want to use the program for real estate investing. By purchasing a multi-unit property and living in one of the units, veterans can start building their investment portfolio while still taking advantage of the benefits of the VA home loan program. However, it’s essential to understand and follow the VA’s guidelines and requirements to ensure a successful investment strategy.
- “About VA Loan Limits.” VA.gov, U.S. Department of Veterans Affairs, https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/about-va-loan-limits/
- “Loan Basics.” VA.gov, U.S. Department of Veterans Affairs, https://www.va.gov/housing-assistance/home-loans/loan-basics/
- “VA Loans and Investment Property.” Veterans United Network, Veterans United Home Loans, https://www.veteransunited.com/education/library/va-loans-and-investment-property/