Using VA loan as soon as getting out of the service

2 Replies

Greetings biggerpocket members! My name is Ian and I just finished my 5 year contract in the Navy couple of days ago. One of the main reasons why I joined is so I can use VA loan and ofcourse to get free college. I am going to use my GI bill this september and if i am not mistakenl, I will get 100 percent tuition paid and a monthly housing allowance of 1600 in the state of Washington. I am also expecting atleast 10 percent for disability. Question is, what are the loop holes i can use to use my VA loan right away and not wait for 2 years working in one company that most banks are looking for. I work for my uncle in his business and the pay is decent. I know I can stay working in his companh for 2 years but I do not want to waste my time paying for rent if I can buy a house and build equity in it. What are your tips for people like me? Ive been researching a lot of stuff about real estate investing, house hacking and stuff like that since I was 18 and im 23 now. Im just too scared to start. Now that i can use VA loan, a decent money for down payment, and lil bit of knowledge, i think im ready to start. Thank you so much for your time reading this.

So first off, thank you for your service. its people like you that keeps us free and safe. Secondly, my best recommendation is to find a local small town VA loan officer that you can sit down with and run numbers. The VA loan process is pretty straight forward but different compared to traditional/conventional lending. Based off the information above and your DTI ratio (which is extremely importantly), as long as you are receiving the BAH (1600), you'd qualify for a VA loan. I have purchased two homes with VA and one with an FHA. ask me anything you want, but with typically more details is needed to really get you a better answer. Good luck!

Ultimately it will be up to your loan officer to approve your loan, but there are always things you can do to increase your odds of not having to wait a lengthy amount of time.  First, obtain a letter of acceptance from the school you plan on attending, this should be enough to prove to your loan officer that you will be attending school and will have at minimum a 1600/month income from the GI bill housing stipend.   Also if you plan on working for your uncle, then obtain a job acceptance letter from him detailing your new job, expected pay, start dates, etc.  Lenders want to know that they will get their money back, so the more prepared you are and the more that you can prove to them that you will still have a sufficient income after you seperate the higher your chances of being approved.

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Other useful hints:

10% disability is nice when it comes to the VA loan, this is because VA loans come with an additional funding fee of 2.15% of the purchase price for a 0% down payment which gets rolled into your loan amount, but if you are receiving a 10% disability then you won't have to pay that fee. For a hypothetical 300k home in Washington that alone could save you almost 6500 in fees so make sure that disability gets approved prior to applying for the VA loan.

USAA or Navy federal (which I'm assuming you are a member of at least one of these) both have a program where if you use one of their real estate agents, you get cash back at closing.  The amount of cash back you get depends on the purchase price of the home, on my most recent purchase two weeks after I closed USAA sent me a check for $950.

Check to see what kind of first time home buyer programs are available.  A quick google search showed that washington has several programs, either 5% down payment assistance, other programs had a 10k down payment assistance, or an interest free loan that is deferred for 30 years of up to 5% of the purchase price.  Check to see what you qualify for and get the process rolling with those as soon as possible as many of them require you to attend a quick home ownership class.

You mentioned house hacking in your post, and I HIGHLY suggest doing this while you are still single.  My first ever purchase had a 800/month mortgage for a 3 bed home.  I rented the other two rooms for a flat fee of 500/month and essentially lived rent free and was able to quickly save up a ton of money to turbocharge my net worth and get me on the right path towards being able to purchase additional rental properties.