What about investing with VA loans?

Question

I know I can buy more than one property under my VA loan but am I affected the same way other borrowers are by having more than one mortgage? For example, will they expect to see 6 months of reserves on my mortgages saved up? And will my second and third VA loans be done with no money down? How many homes can I buy with my VA loan? Who out there has experience with this that I can talk to? I'm trying to create my strategy for the next 3-5 years. Thanks.

Albert Bui · Answer

Justin that is pretty close its 10% + or more disabled in my last transactions involving VA financing to be able to waive the VAFF - VA funding fee. The degree of disability as determined by the VA should be noted on the COE- certificate of eligibility when ordered from the VA admin.

In regards to the VA funding fee for second use its 3.3% of the loan amount so $3,300 dollars for every 100,000 borrowed if you're looking for 100% financing it does however drop down drastically to 1.5% VAFF if you put down atleast 5%, and down to 1.25% VAFF if put down 10% or more on the second use of VA financing. I think the sweet spot is 5% down because you save the 1.8%, biggest bang for the buck.

With regards to second use of VA when you have a current VA loan your COE or certificate of eligibility may not have enough credit to obtain 100% financing on your second purchase since its being tied up on your prior property. The difference the VA does not cover for 100% financing would need 25% of the difference to be brought in. So in essence if your remaining eligibility was enough to cover 100% financing for a $75,000 home but you liked the $125,000 home you'd need to bring in 25% of the 50,000 difference or about $12,500 down payment on 125,000 which in effect is 90% LTV loan.

With regards to seasoning, just speaking for the bank I work at and in past scenarios I would only need 2 months for each additional property up to 6 but it depends on what the automated approval asks for and each situation will vary as the variables are based on credit, debt to income ratios, reserves available, and properties owned.

I hope that helps send me a PM or give me a call if you have any additional questions. The MCC (mortgage credit certificate) is also available for all veterans regardless of being a first time buyer or not but is still subject to income limits per each eligible county in the US. Its a huge tax benefit that you may be eligible for if you make under the income limits in your specific county.

Justin Kerns · Answer

You may also need to pay a VA funding fee unless you are 30% + service connected. I think this may be rolled into the mortgage for a true 0 down otherwise .  It has been a while since I've used my VA, so I suggest you speak with a qualified VA lender or maybe someone else can elaborate on-or correct my response.

Justin Kerns · Answer

I believe you can use your VA loan for an unlimited amount of purchases, just not concurrently.  In other words, you need to pay off or refinance into a non VA backed loan to regain your VA eligibility before purchasing another property.