Using VA home loan for first property

9 Replies

Hello everyone! 

My name is Kaylyn and I am very new to BiggerPockets. However, I think I have a pretty good sense of what is going on and how I can dive into this. I am currently 5 months out from EASing from the Marine Corps with the plan of attending college in Colorado Springs. I am planning to use the VA home loan to purchase my first home that I will live in while being a student at UCCS, however, I definitely want to rent it out after. Anyone in the local area that may be able to give me good suggestions on where to look? Good areas of purchase so it would be most appealing to a future resident? Or really just where to begin at all. I've never bought a home so I've never used the VA home loan. If anyone has anything for me, I'd greatly appreciate it!

Hi Kaylyn. I'm a Veteran and have definitely used the VA loan however, I'm in Michigan so I don't know how much I can be with your local area. A few things to consider with VA loan though, remember that the VA itself does not issue the loan, instead you will still have to find a VA friendly lender. The VA loan can be used with 0% down, don't let anyone tell you different, there may however be loan and closing fees. If you have disability however much, even 0% --- your closing and loan fees can be waived. You can use your VA loan to purchase a property of 1-4 units so long as you life in one of them. Personally, if you are looking to use it as an investment property, I would go with the a fourplex, live in one while you go to college and rent out the other three. Then when you move out you can rent out the fourth.

Keep in mind however, that unless the seller is super military friendly the VA loan is not preferred by sellers. Let me explain.... if offered the option the same amount for purchase between Cash, a Conventional loan or VA loan... most sellers would choose Cash --> Conventional --> VA Loan in that order. With Cash the property is as good as sold --> with Conventional the buyers inspection may reveal issues but those for the most part can be kept and worked out between the buyer and seller ---> with VA loans the VA inspector comes out if something is found not to standard it can essentially derail your loan process........... that's why it is typically not preferred when compared to other loans... Just something to keep in mind if there are multiple offers on the table.

I hope this helps. 


Hi Kaylyn:

I'm a local Realtor and investor in Colorado Springs and would be happy to chat with you. I have 7 years experience and have helped clients buy and sell all over town. If you want to talk about areas, please feel free to message or call me! I agree with Alex that when things were super hot this past summer, my sellers were taking Conventional or cash offers over FHA or VA. However, our local market has seen the typical fall cooling and a lot of agents are still trying to push the price so the DOM have started increasing and sellers are getting more flexible.

Hi Kaylyn - First and foremost, thank you for your service! The VA Home Loan is the best Loan available (with good reason). 0% down payment, flexible credit requirements, flexible debt to income requirements, no mortgage insurance, and the best interest rates on the market. You can definitely use the VA loan to purchase a home and later rent it out. That being said, your VA entitlement will be stored up in the first property, and unless you refinance out of the VA loan later, you will likely need a down payment on the next house, even if you use the VA loan again. You can have two VA loans at the same time, but the process gets more complicated with the 2nd home if you plan to use a VA loan for your next home purchase. If you plan to acquire more properties, be sure to have a plan to convert to conventional financing at some point. I'd be happy to have a conversation or discuss options with you, and I have a great Realtor connection in Colorado Springs if you want to discuss neighborhoods. Let me know.

@Kaylyn Dart : Congrats on surviving the Marine life! Army Veteran myself, and living in Colorado Springs for the last 2 years. As for your questions, the VA home loan is a great financing option for us as mentioned by the other two but has trouble with the strict guidelines for the property conditions. You're essentially looking for a Move-In ready home with minimum or preferably NO repairs needed which can be a difficult task in itself.

As a beginning investor, figure out the best option for you. If you're comfortable living with others, house-hacking a 4 bedroom (SFH) with 3 roommates could be the way to go. (As a Marine, it's a lifestyle I'm sure you're used to by now) If you prefer privacy, the 4-plex would be a better route, but know that these are even more uncommon to find in VA qualifying condition in the area. Competition was tough last year when I closed on my first home (4-bed SFH; House-hacking Currently) between homes that would qualify, and people paying above asking price within days of a new listing. If you have the opportunity to start now, I strongly recommend it because of the delays, searching, questions, walk-thru's, bidding, waiting, paperwork, etc.

In terms of areas in Colorado Springs, the Southeastern part of town near the Airport appears to be the lower income area with more affordable housing (under $200k), and the closer to Monument (North-side) you go, the more you'll end up paying for a decent home. 

Have used VA loan to buy several small multifamily in Colorado Springs. Keep in mind the type of neighborhoods you find 4plexes in are generally not super great so keep that in mind since you'll have to live there. Old Colorado City is nice but houses tend to need a lot of work as theyre 100+ years old. Lot of multis by Ft Carson but it's a sketchy area. North of Peterson is not too bad. Theres a large 4plex community west side near garden of the gods, these tend to fetch higher rents than the rest. You can look near Fountain but there are unresolved water issues there recently and also it's not as in demand as more central places.

I wouldn't buy 1b/1ba units, they're much harder to rent with the abundance of affordable 2/1s.

Feel free to message me with any questions or if you want to discuss locations or exoeriences buying multis with va.

Hello Kaylyn,

Thanks for starting this thread because the comments helped me too. I am in a similar situation like yours. Recently Army retired (medic) and headed back home to Detroit. Will look for a Quad and live in one unit. I want to use my VA loan but I have heard what some of the others are talking about. Getting the VA inspection to be positive seems to always come up and scare people off. I'm in Detroit so I don't know what to expect. My plan is to try to go VA first and see what happens. I can almost guarantee that the house will need some sort of repair so I'm trying to figure out what I can do. I just read that you can't combine a VA loan with a FHA203K. I thought the 203K was repair loan only. Turns out it is loan for house and loan for repairs combined.

Before you start to buy your house with VA loan you should check out what the VA appraiser is going to be looking for. I saw a checklist and it seems to be pretty straightforward. They say it's not a full house inspection but VA is looking for certain things to be correct. Good luck to both of us.

-- Lisa

Hi @Kaylyn Dart - thank you for serving. As others have pointed out, the VA loan have some tremendous benefits as well as some drawbacks, as all loan products do. I have a VA loan myself and couldn't be happier with it, but it isn't for everybody.

Your original post did not mention income. As a college student, what income would you have available to you in order to pay for the home? G.I. Bill, and other military educational benefits, do not count as qualifying income.

Reading through the responses, I was hoping someone would tell you not to try this plan. I guess I will be the bad guy here. When you buy a house in Colorado Springs, you will be paying an all time record high price. At no time in history have homes cost more in that area. Even though rents are also ridiculous, you will not make much money after expenses as a rental. As an investor, the idea is to buy a property far below market value. This is usually a distressed property in need of repairs that you can get at wholesale price, then rent it out at retail price. If you were my little sister, I would beg you to learn more about the Colorado Springs market and investing before going into debt in hopes of getting rich. 

Hi Kaylyn,

I did my first VA purchase in Colorado Springs in 2009 and currently have it rented out. Would be happy to chat more about my experiences

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