How to purchase a multi unit with a VA Home Loan from David Piatek on Vimeo.
How to Purchase a Multi-Unit with a VA Home Loan
by David Piatek
Military members have the opportunity to purchase a 2 to 4 unit property with 100% financing with no pre-set loan limit as long as they are eligible and qualified for the VA Home Loan. It also needs to be a Primary Resident, meaning they intent to live in it.
In the past, military members would have to either qualify with their own income OR have 2 years of property management experience managing a property that would have to be reflected on their tax returns. This made it hard for a lot of military members to utilize the VA Home Loan to purchase a Multi-unit. Especially as other loan products offered various options to use rental income to offset a mortgage payment. Meaning, they can use future rental income, based on 75% of the average market rent to include bedroom/ bathroom/ square footage and condition – per unit in the area to qualify for a property as long as they have proper reserves.
Recently, the VA made a change to its multi-unit requirement. They added another option to use rental income to offset the mortgage payment if they meet 2 requirements. They hire a property manager to help them manage the property and they have 6 months reserves to include principle, interest, taxes, and insurance in assets which can include but not limited to: checking, savings, retirement account, money market or a joint account. They can’t use gift funds or cash under the mattress to count towards reserves but they can get ALL closing costs as a gift or a seller credit. If they’re applying with a spouse, they can use the spouses assets to qualify.
The rental income works the same way, they can use 75% of the average market rent based on bedroom/ bathroom/ square footage and condition – per unit in the area to qualify. NOTE: this is not based on the ACTUAL rent roll of the property – it’s the average market rent. They can’t use one of the units rental income because the military member will be occupying one of the units.
The VA Home Loan is a phenomenal product, that offers huge benefits and savings to military members and their families. If you have questions about the VA Home Loan or working with military members, please give me a call, text or shoot me an email. I’m happy to help.
Have a great day!
Subject to credit approval. Terms and conditions may apply. Subject to VA eligibility requirements. Property insurance is required on all loan secured by property.