Just starting out, use VA loan?

Question

Currently in search of any advice regarding utilizing a VA loan for a house hack and if a long-distance investment would be a good idea, suggestions?

Ryan Britt · Answer

@David Pere I'll be sure to keep my eyes open and read through your VA loan articles as well, thanks for all of the information so far

Jeff Brower · Answer

Use that VA loan to get into a 4 unit! If you can find one locally that makes financial sense that is the best way to get the most bang for your buck. Owner occupy it for the one year requirement and then keep that cash cow for LIFE.

Elise Marquette · Answer

VA loan is the best loan program on the market. It's the easiest to qualify for, has the most flexible debt to income requirements, there's no mortgage insurance, the rates are lower, and of course, zero down. I recommend you connect with @Jeff Shumway to discuss VA loans further. He's a USAF Veteran and lender so is quite knowledgeable about the program.

For any long distance investing, you'll have to do either a Conventional loan or a non-traditional mortgage. VA only allows for owner occupied

Ryan Britt · Answer

@David Pere I was assuming a traditional loan would have to be used for long distance, therefore my current plan is to use the VA benefit for a house hack once I've separated within the next year, just didn't know if I should pull the trigger with a traditional if I happen to come across a great opportunity while still overseas.

Kevin Mitchell · Answer

@Ryan Britt You can use the VA loan to purchase 1-4 unit properties. 2-4 unit properties have minor variations in qualifying and closing out the loan. Nothing alarming but simple things like having 6 months PITIA (principal, interest, taxes, insurance, and association dues {if applicable}) reserves. There are also qualifying factors that help the affordability of the PITIA so don't squirm away just because a PITIA for the full 4-units is $6,000/mo or something. As far as purchasing from overseas, you can purchase from anywhere but overseas may trigger the need for a POA if documents require wet signatures (which many states do). The VA Pamphlet 26-7 (often referred to as the VA lenders handbook) states you must intend to occupy the property as your primary residence within 60 days, however, that can be extended up to 12 months on case by case basis if circumstances permit - i.e. purchasing while deployed or on extended training periods out of the subject property area. There is NO requirement for the length of time you must live there before moving. This is not an omitted policy for the design of house hacking, rather the VA understands the degree of uncertainty that service members' careers bring regarding geographic stability.

VA Lenders Handbook - https://www.benefits.va.gov/wa...

Occupancy // Section 5 - https://www.benefits.va.gov/WA...

Multi-Unit Property // Section 2.n. - https://www.benefits.va.gov/WA...  // comment within: "Include the prospective rental income in effective income only if: (1) the borrower has a reasonable likelihood of success as a landlord, and (2) cash reserves totaling at least 6 months mortgage payments (PITI << this SHOULD say PITIA because ALL underwriters will count association dues against the debt service); in ref to (1) - reasonable likelihood is determined by either having 12+ months experience in the capacity of being a landlord OR hiring a property manager to manage the prospective subject property.

Ryan Britt · Answer

@Jeff Brower thanks for the info, I'll be looking into 4 units from now on but still keep the commercial idea in my back pocket just in case the right opportunity presents itself

Jeff Brower · Answer

@Ryan Marvin Britt Anything 5+ is considered commercial and you wont be able to use VA with a low down payment owner occupy loan. 2/3/4 units are still considered residential so you could get into one of these with your VA if you move into it within 60 days of closing and intend to reside there for over 1 year.

David Pere · Answer

@Ryan Marvin Britt Absolutely if you have the capital, and it is a great day!

Ryan Britt · Answer

@Jeff Brower as of right now that is the current plan, I was at first only in search of a duplex but with further research and consideration I have recently started to lean more towards 4 units. In your opinion would you suggest just starting with only a 4 unit or could starting with a 4-10 unit be realistic as well?

David Pere · Answer

@Ryan Marvin Britt Unfortunately, you cannot use the VA loan for a long-distance investment as you must intend to occupy the property. I have written two articles on BiggerPockets about the VA loan and recommend that you check them out for more information.

All that being said, house hacking with the VA loan is one of my favorite strategies, and I think you could be very successful doing it in your local market. @Kevin Mitchell and @Jon Lallande are my two go to VA lenders.

Just starting out, use VA loan?

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