How To Get A VA Loan For An Investment Property

How to Get a VA Loan for an Investment Property

How to Get a VA Loan for an Investment Property

For eligible Veterans, getting approved for an investment property is worth it. By turning your primary residence into a rental property to generate income, an investment property VA mortgage can help make the mortgage payment for you, which will benefit you, the military service member, and your family, who may be military dependents. 

What Are the Options for Getting a VA Loan for an Investment Property with HomePromise?

There are only two ways to get an investment property with a VA mortgage lender. If you don’t want to live on the property while renting it, then you’ll need to buy a home, live in it for one year, and then move out and rent it. Your other option is to purchase a 2-4 unit multi-family home and rent it out while living in one unit. This kind of investment property needs to be owner-occupied.

There are some unique challenges in finding a lender willing to finance an investment VA loan. The first challenge Veterans may face is that some VA lenders only finance single-family homes even though the Department of Veterans Affairs permits financing on multi-unit properties with up to four units.

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Another challenge is that many lenders have strict guidelines for calculating the income from rented units. This situation usually results in a denial or the lender forces the Veteran to receive a smaller loan amount.

How To Get A VA Loan For An Investment Property

If you decide to purchase a multi-family home with multiple units, we are here to help! The VA guidelines for calculating income earned from rental units are generous. With HomePromise, we make it easier for Veterans and active military members to qualify. The secret is finding a lender, like HomePromise, who uses just the VA government guidelines to approve VA loans. Other lenders use their own guidelines on top of the VA guidelines, making it hard to qualify. Why would a lender do this? Because they are afraid that making loans strictly according to the VA guidelines is too risky. With us, you don’t have to worry about strict guidelines that block you from accessing your VA Home Loan benefits.

If you decide to purchase a single-family home, live in it, and then move out so you can rent it, HomePromise can also help! It is possible to have two VA loans at once, so you can buy and live in another home with a VA loan while using your first property as a rental. To do this, you’ll need to qualify with your income and credit score. Don’t give up if you’re worried about your credit score! HomePromise approves loans for people with low credit scores when other lenders will not. Plus, we are VA mortgage experts, so you can use our website as your personal mortgage research center.

Are Investment Properties A Good Idea?

The ability to earn income from the home you call your principal residence is a huge benefit for a multifamily home. You can get the same benefit from a home that you don’t want to sell, even if you move somewhere else. That investment is made even better when you can use your VA benefits to purchase these types of homes with no down payment. That means you can earn income on an investment property for just the amount of your closing costs – and those can often be paid by the seller!

If you were to buy real estate as an investment without the benefit of a VA loan you would usually have to make a down payment of 20% to 25% or more. This dramatically affects the return on your investment which is the key metric for evaluating whether an investment is a good use of your money. VA loans to purchase investment properties are a great idea for veterans interested in earning income from real estate.

What Are The VA Guidelines For An Investment Property?

According to the Department of Veterans Affairs, the basic requirements are that you need to be a Veteran and have enough income to qualify for the VA mortgage loan. A review of your credit history will also help determine that you meet the VA credit history guidelines. Some lenders have guidelines that are stricter than the actual VA guidelines defined by the government agency, so it’s important to find a lender who will accept a credit history that had some challenges in the past.

If you own a multi-unit property, the key to qualifying for an investment property VA loan is to find a lender who will allow you to use the maximum amount of income from the rental units. Some lenders will only allow you to use a tiny fraction of the rental income. But HomePromise will qualify you based on the maximum amount of income from the rented units based on the VA guidelines. The total number of rental units permitted is 3. This means you can buy a maximum of a 4-unit home. This can make a huge difference in being able to qualify for a multi-family VA loan. Other lenders will qualify you using a tiny amount of your rental income. Not us. We will let you use the most income possible under the VA guidelines from your rental units!

If your plan is to rent out a second home that you’ve lived in for at least a year, the key to qualifying is finding a lender who will approve you for two VA loans at once. Some lenders may deny you based on your credit score or because they fear that your rental income will not be consistent. But HomePromise may approve you when other lenders will not!

Why Choose HomePromise?

Some lenders struggle with investment properties because they’re afraid of the risk that they would take on by making that loan. But at HomePromise, we prioritize you, which is why we sometimes approve applicants with credit scores as low as 580. Contact us now at 800-720-0250 to find out more about mortgage rates, your VA loan limits, how to apply quickly for a home purchase or refinance, and more.