House flipping is a common practice in real estate and occurs when an investor buys a house, makes repairs, holds onto it for a short period, and then sells the property at a higher price. If done well, it can be a potentially lucrative endeavor and even pursued as a full-time career. VA home loans can be used for home flipping, so long as the buyer adheres to certain requirements, and can work to the investor’s advantage in many ways. Below, we’ve discussed the benefits in detail.
Using a VA Loan to Flip a Home
Maybe you’ve recently retired from the military and are thinking about pursuing a career in real estate. Or perhaps you’re looking to add to your investment portfolio. If you’re entitled to VA benefits, you may be able to use a VA loan to buy and flip a home.
VA loans can be a great option for home flipping due to their relaxed requirements and zero-down benefits. However, it’s important to keep in mind that these loans are reserved for primary residences only. That means if you want to use your VA benefits to flip a property, you’ll need to live in it and use it as your primary residence. In real estate, this is referred to as a “live-in flip.”
Benefits of VA Loans for Live-In Flipping
While conventional loans have strict qualification requirements and require a considerable down payment, VA loans do not. This makes them a great option for borrowers that qualify. Some of the benefits of using a VA loan for live-in flipping include:
- No downpayment, which makes it easier to buy a home for investors that are just starting out.
- Lower interest rates so buyers have a lower payment during the period when they own and are working on the home.
- Relaxed credit score and debt-to-income requirements
- May be able to use a VA rehab loan to finance some of the repairs.
- Limited closing costs, making it more affordable to purchase the property.
VA Loan Requirements for Flipping a Home
The VA does not have specific requirements when it comes to flipping a home. Rather, investors are required to stick to the same set of rules that apply to other VA borrowers. Additionally, if you plan on flipping a property with a VA home loan, you may also have to follow certain requirements set out by your lender. Here are some important things to keep in mind:
Primary Residence
VA loans can only be used to purchase a primary residence. Therefore, if you plan on flipping the home, you must live in it and use it as your primary residence before selling. Usually, investors will live in the house while they’re renovating it, then sell it later once the repairs are complete.
Occupancy Requirements
According to VA requirements, you must occupy the property within a “reasonable time” after closing on the loan. Usually, this means no later than 60 days after closing. Additionally, your lender may also have requirements about how long you must own and/or occupy the property.
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