Dual military using separate VA loans

9 Replies

I have a question in regards to me and my wife using our VA loans. So my question is since we are both active duty aren’t we both entitled to our VA LOANS “SEPARATELY” ? I can buy a piece of property and my spouse should be able to do the same regardless if we are married was my understanding. 1) I want to buy an investment property with my va loan (yes I know I have to occupy the property for up to 6 months to a year) 2) She wants to buy a house with hers I went through my same mortgage company where I bought my previous property and he said it would be hard to explain that to the lenders since you guys aren’t getting divorced or separated... so I’m just a little confused as to why that would matter if we both are entitled to a va loan separately? 3) Also would it make it better if I used an FHA loan to buy my investment property? Thanks in advance BP !

VA loans can be used to purchase a home in which the homebuyer intends to occupy as their primary residence. A VA loan cannot be used to purchase investment property or land.

You are entitled to use your loans separately, but if you use yours for your primary residence, your spouse cannot use hers for a separate "primary residence". That is why your mortgage company said it will be hard to explain since you are not getting divorced or separated. You cannot occupy two primary residences so therefore your wife's VA loan would obviously be for an investment property, and that is not allowed.

FHA loan has the same stipulations as being used for a primary residence. You'd be better off with one VA loan and then a conventional loan for the investment property.

My apologies if I was not clear in my response. VA loans can be used for investment properties so long as they are owner-occupied. a 1-4 unit property qualifies for this as long as you live there.

You are both entitled to your VA loans seperately but you have to be aware of your timeline and what you're trying to do. I also suggest looking at the actual VA loan terms on the official government website,

https://www.benefits.va.gov/homeloans/purchaseco_e... , that will get you started but you'll have to dig around in there. I found that different lenders have different approaches to how the enforce and take on a VA loan client. For example, some lenders require 12 month occupancy instead of 6.

What you could do is you and your wife buy a home, occupy it jointly for the required amount of time, and then move into another home with her VA loan. This second move would probably need a reason (more floor space and we are expecting a kid, a better neighborhood, easier commute) in order to be signed off on by your lender.

An easier avenue would be like the previous poster mentioned, purchase a small multi and live in a unit and rent the others.

@Romeo hey brother, I currently live in clarksville and invest here. My wife was also in the military so i can relate to your situation. we ended up having to owner occ our forst 4 plex under my Va loan for a year then we applied for an additional Loan for another 4 plex using her Va loan, which we currently occupy. It does kind of stink if you are trying to buy them both at the same time but still being able to scale the quickly is awesome even if you have to wait the year in between. Feel free to reach out at anytime if you want to grab coffee and talk investing! Good luck! 

Originally posted by @Roemeo Barnette :
@Bob Okenwa thanks for your response however you can use the va loan for investment property. I have seen it done plenty of times and it’s in the va loan regulation up to 4 units.

 In the eyes of the banks investment properties are NOT owner occupied..... 

Your 4 unit might be an investment to you, but to the bank it's your primary residence... and that's where the banks are going to have a hard time believing a couple that's married (and has a history of living together) are going both occupy two separate primary residences without getting separated or divorced...

Obviously some exceptions here if you were located at seperate duty stations etc, but that's different.

@Roemeo Barnette , I’ve been through variations of this same scenario with several clients over the past decade or so and the other posters here are spot on. I’ll reiterate a few things and throw in my two cents in hopes that our responses collectively will help you nail down the best approach for your specific situation.  

Using your VA loan you are only able to buy a "primary residence". However, because 2-4 unit buildings are considered multi-family residential, not multi-family commercial as is the case with 5+ unit buildings, (although a 2-4 unit will still be considered commercial for property tax purposes) you can owner-occupy up to a 4-unit.

The issue, as previously mentioned, is that a bank's underwriter won't be able to justify (read: approve) you and your spouse using both of your VA loans to owner-occupy two separate properties at the same time unless you were stationed at two different duty stations.

What we've seen in the past is where a client of ours will buy a quad (4-unit) with their VA loan, occupying one of the units and then in 12 months or so either use their VA loan for a second time or their spouses for the first time to buy the next multi-family or SFR. I'd recommend using your spouses for the second purchase so that, if not exempt, your VA funding fees will only be 2.15% for first-time use each time instead of bumping up to 3.3% for subsequent uses.

The only hang up is when it goes to underwriting they will most likely have you do a letter of explanation (LOX) to explain why you are wanting to purchase another property. This has never been much of an issue in my experience. I’ve seen an LOX written to say some versions of the following; 1) This new property has a garage and I need a garage. 2) The new property has more/less sq. ft. and we need more/less space due to x (having a child, downsizing, etc.) 3) The new property is in a different, more desireable school zone (if applicable). 4) The new property is closer to where I work (or go to school, etc.)

Although it isn't always an ideal living situation for some people, I would highly encourage anyone in your situation that is investment-minded to use each of your VA loans back to back for each of you to buy a 4-unit building as the numbers tend to work best on those here in Clarksville and it would make sense, as long as the numbers work, of course, to get as many units as possible with zero out of pocket while you can. You'll look back one day when you're ready to buy a multi-family with a normal conventional loan, 20-25% down payment, and thank yourself for saving tens of thousands of dollars having used your VA loan for the first couple.

I have to admit that I was a little jealous recently when I was analyzing a MFR deal and the numbers worked out to where I'd need to bring approximately $85,000 to closing and then ran the numbers on the same deal for a client that was going to use their VA loan and they would be bringing $0 to closing due to no down payment and the fact that the seller would cover all of the closing costs.

I hope that helps! Best of luck!

@Justin Cory hey how’s it going Justin! Thanks for the insight I am actually working with Bryce on closing on a quad in a similar neighborhood to one of yours. I am using the VA for the second time, the 1x was here in WA on a SFR . I look forward to meeting and working with you both . Thanks again !
@Roemeo Barnette I don’t know if it’s been addressed but the VA Loan is a lifetime entitlement that caps out at (I think) $420k meaning you could get a place occupy it and then move If you have reason to move and get another place with your va loan and rent out your previous home and repeat until your entitlement runs out and then do the same thing with your wife’s va loan til it caps. And once the loan is paid back you can redo it all over again. Depending on the market if you did that with all quadplexes you could be at 16 doors in 4 years (not including traditional investment properties you may have aquIred) with a total of $0 in downpayments its an under used loophole in the system.

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