Going from VA Loan to Conventional

4 Replies

I want to hear BP's thoughts on the following: I've used my VA home loan for my 2nd home. I am currently refi my 1st home (from VA to conventional) & will rent it out. The thought came to mind to get a 3rd home using my VA. To my knowledge, I have 60 days to move into it as my primary residence. My thought is refi that 3rd home to a conventional loan with 30days of the purchase, then rent it out. By doing this refi on the 3rd home, I should not have to move into it pending the lender's guidelines. I already plan to check with my lender & ask him this same question. Essentially, i'm freeing myself from the VA loan to use again later on while minimizing the downpayment on a future home. If I pursue this course, I am operating within the guidelines but wanted to get a sanity check from those more season in this area than myself.

Hi @BJ Butler ,

When you sign at the closing table, you're not just saying that you promise to move in within 60 days... you're promising that you INTEND to move in within 60 days. It appears that this is not your intent. Be careful.

On top of that, conventional loans have LTV requirements. Where do you plan to get ~20% equity from in 30 days? You'd have to come in with money during a refinance, and that amount of money will be approximately equal to what the down payment would have been.

I think it's awesome to figure out innovative ways to work guidelines to your advantage, but I don't see this one as workable. 

That is a good point you made Chris, referring to the INTEND part. As for the 20% equity, it's also my plan to purchase properties at a discount or force appreciation to them once I do so. By using my VA, I would not have to pay the initial downpayment for the 3rd home. At some point when I refi, I am not require to put down 20%.

@BJ Butler , it's only a good plan IF you move in - every time! Follow the rules! 

If you want to buy distressed bargain properties more often than once a year (which IS a good idea) - I suggest you start saving straight away - so that you can borrow conventionally from day one.

Retain your VA entitlements for those ones that you WILL move into. Thank you for your service!...

Brent, I understand. Thank you for your input. 

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