VA or traditional loan?

Question

Mike Foster · Answer

@Matt Whittle VA loan all the way buddy!The most important thing you can learn is leverage man. If you can buy a four-unit, do it! And use all the income you are earning from the other units to pay equity back into the loan. One of the things banks don't advertise about the VA loan is that they don't want to see you "downgrade." (Which I think is criminal) Meaning, if you choose to buy a Single-family for your first one, it's extremely difficult to qualify for a loan on a Multi-family afterward. It's stupid, but its what I've been hearing in our community. But going back to that leverage bit... Why put your own money if you don't have to? You've got great credit, you've got no debt, you've saved up your money. Use it for something else! If you know you are going to have tenants that pay more than your mortgage each month, toss their money into the property. Or even better, use your money to improve the property's value! The funding fee gets wrapped into the loan so you don't even have to pay that out of pocket if you don't want to. Doing so will lower your percentage a bit but not drastically. Let me know if you have any more questions about the VA loan bro!

Eric Veronica · Answer

@Matt Whittle the answer really comes down to the funding fee which is a one time, upfront fee that you pay to the VA.  The fee can vary from 1.25% - 3.3% of the loan amount depending on down payment and whether you have used the VA home loan before.

If you have good credit and plan on putting 20% down then conventional is usually a better option.  Anything less than 20% down or anything less than excellent credit and VA usually wins out

Note that if you are a disabled vet then the funding fee is waived.  In this scenario VA is the winner

Below is a link which breaks down the VA funding fees in different situations

https://www.nerdwallet.com/assets/blog/wp-content/uploads/2017/04/CD-0421-MOR-VAFundingFee_TableRecreation_Final_Update.png

John Warren · Answer

@Matt Whittle the VA loan makes sense in some scenarios, but you end up having to buy a pristine property. The 5% down conventional loan is a loan that few people know about. It is one of my favorite loans for buying fixer upper 3-4 units. You also have the FHA 3.5% down loan available, although the VA loan is better than the FHA loan in pretty much every way.

Mike Foster · Answer

@Matt Whittle No worries man best of luck!

Stephanie P. · Answer

@Matt Whittle

I would use an FHA loan to finance the first and then the VA for the next.

VA or traditional loan?

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