VA loan or Bank Loan

[Kirk R.]

Thinking about purchasing an investment property.

I can get a VA loan that will buy up to a quad without any money down up to about $125k. Loan would be at about 4 to 4.5%.

I can get a bank loan with 20% down. Only have about $10,000 cash so only go to $50,000 on the property. Bank loan through my credit union @ about 4 to 4.5% with a shorter time span to pay back.

Questions:

1. If I use the bank loan, the amount I would qualify for on the VA loan would go down? I have to have a two year history before they would count the rental income??? If I did the VA first then the bank loan would still just look for the 20% down?

2. Make the most sense to use the VA loan first and then the bank loan after that?

3. Is 3 to 6 months reserve the right amount to have on hand?

4. Try to wholesale and then have the fall back plan that I can buy it myself if I can't find buyer....although VA loan has pretty strict condition requirements.

What else should I consider? Not the easiest to find a quad in the area.

Thanks for the input.

[Matt Devincenzo]

I found this on the VA site. It doesn't directly answer your question but does begin down the "eligibility" rabbit trail. I'm sure the info is out there you'll just have to find it. I found it very interesting that you can purchase a 1-4 unit but nowhere on the VA site do they mention that at least not that I was able to find.

http://www.va.gov/opa/publications/benefits_book/benefits_chap06.asp

Restoration of Entitlement: Veterans can have previously-used entitlement "restored" to purchase another home with a VA loan if:

The property purchased with the prior VA loan has been sold and the loan paid in full, or
A qualified Veteran-transferee (buyer) agrees to assume the VA loan and substitute his or her entitlement for the same amount of entitlement originally used by the Veteran seller. The entitlement may also be restored one time only if the Veteran has repaid the prior VA loan in full, but has not disposed of the property purchased with the prior VA loan. Remaining entitlement and restoration of entitlement can be requested through the VA Eligibility Center by completing VA

VA home loans can be used to:
Buy a home, a condominium unit in a VA-approved project
Build a home
Simultaneously purchase and improve a home
Improve a home by installing energy-related features or making energy efficient improvements
Buy a manufactured home and/or lot.