How much landlording eexperience is needed to reuse VA loan?

Question

So I'm trying to get all my ducks in a row in order to get my first rental property. My wife and I currently just own our primary residence here in Idaho and have a VA loan on it (I'm a veteran). Not long ago, the VA lifted the total cap on total entitlement amount so there is no need to refi out of a VA loan in order to 'free up' entitlement for a next purchase anymore. I spoke to our lender who I've used with each of my primary residences, and he said that if we were to keep and rent out this house, keeping the VA loan, and purchase a new primary residence with a VA loan to move into, in order to use the rent on the first home towards qualifying I have to have landlording experience. Given being able to get rock-bottom rates (we just refi'ed ours to 2.75%) with 0% down and no PMI, this is huge in a house hack scenario.

My questions are: 1. is this a local/lender-specific requirement or do all lenders have this when issuing VA loans, and 2. how much experience is needed, and 3. is it required to be shown on a tax return or will signed lease agreements suffice?

Thanks in advance!

My questions are: 1. is this a local/lender-specific requirement or do all lenders have this when issuing VA loans, and 2. how much experience is needed, and 3. is it required to be shown on a tax return or will signed lease agreements suffice?

Thanks in advance!

Joshua Jones · Answer

@Jason Bohling there are a few comments in your questions I want to address. With regard to the cap you are referencing, the "no cap" anymore DOES NOT apply if you already have a current VA loan. If you have a current VA loan, you are bound by the current caps for your county. If you have full entitlement, then YES there is NO LIMIT to the VA LOAN. If you do not have full entitlement  (i.e. a current VA loan out) then a cap applies. VA is a very niche product. Most lenders do it, but not everyone knows the rules.

For landlording experience this is what is subject to an underwriter. Typically it can be if your career is a related to property management or you have 1 year of taxes with rent being claimed would count.

Or if you hired a management company to manage your place, you can use a portion of the rent and use that as well.

John Warren · Answer

@Jason Bohling the other thing you can do is to hire a property manager for your current place. This is an easier work around than trying to prove land lording experience if you don't have any. One of my clients in Berwyn did this recently.

Jason Bohling · Answer

Thanks everyone for your insights and the clarification.  I really appreciate it.

Alejandro Calixto · Answer

@Joshua Jones perfect. Thank you so much as always.

Sorry forgot to paste the link to my previous post.

https://www.va.gov/housing-assistance/home-loans/loan-limits/

Alejandro Calixto · Answer

@John Warren, again you come thru with a great gem.

@Jason Bohling, you pose some great questions. I too learned that since the beginning of 2020 there is no more "loan limit" for VA loans. But I am still unsure of what that means exactly. According to he VA site below, it seems if you are still paying back an active VA loan then you are considered to have "remaining entitlement" instead of "full entitlement". With "remaining entitlement" it seems there are still loan limits based off of counties. It sounds like this contradicts what your lender was telling you. But I may be mistaken.

At this point, we definitely have to refer to the experts. Cue in @Joshua Jones. Josh what can you say about this kind of scenario?

Jason Bohling · Answer

@John Warren thanks for the reply and the suggestion, I'm going to discuss this with my lender.

How much landlording eexperience is needed to reuse VA loan?

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