If you are a veteran wondering if you could utilize your VA benefits to buy a duplex, triplex, quadplex, or other type of rental property as your primary residence while renting out one or more units, you’re not alone. In this article, we’ll cover important guidelines regarding VA home loans and attached rental units.
VA Loans for Properties with Rental Units
Many veterans look into VA loans when considering purchasing a home due to their many benefits, including reduced rates and low (or even no) down payment requirements. However, there is often confusion around the guidelines for using VA home loans for properties that have an attached rental unit.
Buying a home with a rental unit can be advantageous for many reasons. It can help offset some of the costs associated with homeownership, help you gain access to income that you can put in your savings or retirement fund, or diversify your investment portfolio. But when it comes to VA loans, buying a multi-unit property can be complicated. Below, we’ve discussed some important factors to keep in mind.
Can I Use a VA Loan for a Home with a Rental Unit?
Yes, VA (U.S. Department of Veterans Affairs) home loans can be used for homes with rental units, but there are some specific guidelines to keep in mind.
The primary purpose of a VA home loan is to help eligible veterans, service members, and their surviving spouses purchase or refinance a primary residence. However, the VA does allow the purchase of properties with up to four units, if the borrower intends to live in one of the units as their primary residence.
Here are some key points to consider:
Occupancy Requirements
For properties with multiple units, the borrower must verify that they will occupy one of the units as their primary residence. This means that the borrower should live in one of the units for a reasonable amount of time. You cannot use a VA loan for a property that you do not intend to use as your primary residence.
Projected Rental Income
Projected rental income from other units may be able to potentially be counted towards your income qualifications and debt-to-income ratio. However, lenders have varying policies on this. Borrowers should discuss rental income guidelines with their lender.
Property Type
Multi-family properties purchased with VA home loans can have up to four units only. Additionally, as previously stated, at least one of the units must be used as the veteran’s primary residence.
VA loans cannot be used to purchase commercial properties. However, it may be possible to use a VA loan for a mixed-use property. This is a property that is zoned for both residential and commercial uses.
If buying a mixed-use property, it’s important to note that the building will still have to meet the VA’s minimum property requirements. Like a residential building, it also cannot have more than four units. Additionally, there can be no more than one unit that’s utilized as the commercial space.
Learn More About VA Home Loans
Ready to turn your dream of homeownership into a reality with a VA home loan? Mortgage Solutions Financial is here to guide you through the process! Call today to speak to our expert team!
