Home Buying in 97123>Question Details

rose.gang, Home Owner in Hillsboro, OR

Can you use your VA loan eligibility to buy a second home? One that you could rent to a relative? Perhaps a rent to own situation?

Asked by rose.gang, Hillsboro, OR Mon Feb 11, 2013

Help the community by answering this question:


if I've used a VA Home Loan Before? -- http://www.benefits.va.gov/homeloans/purchaseco_certificate.asp

You can have previously-used entitlement "restored" one time only in order to purchase another home with a VA loan if the borrower has paid off the prior loan but still owns the property, and wants to use his entitlement to purchase a second home. This often occurs with active duty borrowers who PCS to a new station but want to keep their existing home for retirement.

However, if the prior loan has been paid off and the property is no longer owned, they can have their entitlement restored as many times as they want. They can re-use their VA eligibility for every home purchase from the first to the last.

Features and benefits of the VA loan program include the following - http://vastreamlinemortgage.net/va-mortgage-loan-advantages-…
3 votes Thank Flag Link Fri May 1, 2015
The VA stipulates that the VA home loans are intended solely for residential properties and excludes investment properties. The VA defines investment properties as “a property that the owner does not occupy as a primary residence or second home, regardless of whether the property generates income for the borrower.” In other words, in order to use the VA home loan option, the borrower must live in the property.

Investment Property Loophole

Essentially, the VA rules say “A residential property may not consist of more than four family units and one business unit except in the case of certain joint loans.”

This means that you can get a loan from a company that offers low VA rates and purchase a multi-family home with up to four units and a storefront.

You could live in one of the units, and earn income by renting out the remaining three. If you use the VA loan to purchase a multi-unit building with a storefront, you can also rent out the store front, or use it to run your own business.

From Residence to Investment
VA home loans don’t have caps, but each veteran has a certain amount that he is qualified to borrow without making a down payment. The average entitlement is $36,000, but some lenders will loan up to four times that amount, without requiring a down payment, if you meet the bank’s credit and income requirements.

> How to Make it Work:

* Purchase Property A – a four-unit home – with a VA loan.

* Rent out three of the units and live in one to satisfy the VA loan occupancy requirements.

* After a year, find determine your eligibility for an IRRRL. If eligible, take out an IRRRL on your Property A and continue living in the property.

* Start the process of getting approval for a second VA loan. Keep in mind that the entitlement you receive is the amount you can borrow with no money down. You could still qualify for a VA loan, with a small down payment even if you have used up your entitlement.
Reference Link: http://valoanguidelines.org/
2 votes Thank Flag Link Tue May 5, 2015
I live in Georgia in a home that I co-own. It has not mortgage. I have restored my VA eligibility and would like to buy a second home in Florida. I would split my time between the two. It would be in my name only. Would this be considered a vacation by VA or would I be eligible?
0 votes Thank Flag Link Tue Mar 8, 2016
As for VA loans in general they do not allow for a purchase of a non-owner home. The benefit is intended for vets and active duty to purchase a home in ehich they will leave in. The only expection to the rule is when have an active duty person who is out of the country and there spouse will be in the home.

I have been doing VA loans for many years and have not seen the VA move away from the requirment. Contact me with any other questions on VA loans
0 votes Thank Flag Link Tue Feb 12, 2013
Generaly, you do have to be an owner occupant for a VA loan. There are a few exceptions which a lender could give you more information about. I found this article that might help explain a little better, http://www.valoans.com/va_article?id=104.
0 votes Thank Flag Link Tue Feb 12, 2013
You better ask your lender about that one. It will depend on many variables, not just income, expenses etc.
0 votes Thank Flag Link Tue Feb 12, 2013
No... VA loans are to be used for the purchase of a primary residence only. It is possible to use any remaining eligibility to purchase a home that you plan to occupy as part of a relocation or likewise.
0 votes Thank Flag Link Mon Feb 11, 2013
Yes. There are some special circumstances where a Veteran CAN use his/her VA benefits for a second home. If you don't live in the first one anymore for some reason (you moved to a new city for example), you may qualify to use your VA benefits again. If you want to rent part of the new house to relatives, that's okay too, as long as you also live in it.

The first home can be rented to relatives, but not as a rent to own. The best thing to do is find a qualified VA lender to ask about your particular situation. I'd be happy to recommend one. I work with two that are really terrific!
0 votes Thank Flag Link Mon Feb 11, 2013
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