Can I Use a VA Loan to Purchase Multi-Family Property?
God bless America! Yes, you can use a VA loan to purchase a Two Flat, Three Flat or Four Flat in Chicago or anywhere else in the nation. Instead of buying that condo or single family home, buy a four flat, call it home and live for free from the rents of the other three units! What better way to start a new career in Real Estate Investing? To be eligible, you must be one of the following:
- Current or former National Guard or Reserve member who has been activated Federal active service
- Active Duty Service member
- Current National Guard or Reserve member who has never been Federal active service
- Discharged member of the National Guard who has never been activated for Federal active service
- Discharged member of the Selected Reserve who has never been activated for Federal active service
- A Surviving Spouse in Receipt of DIC (Dependency & Indemnity Compensation) benefits
- A Surviving Spouse and are not receiving DIC (Dependency & Indemnity Compensation) benefits
Assuming that you fit into one of these categories, the next step would be to speak to a lender who specializes in VA loans about the Certificate of Eligibility that is needed. Not all lenders will be well-versed with these loans, so save time and effort by using someone that’s closed a few of these before.
Using a VA loan in the end will be somewhat similar to a normal home purchase, but here are some of the highlights that you should be aware of:
- For Illinois, the VA Loan Limit for 0% down (that’s correct, NO DOWN PAYMENT) for all counties is $417,000.
- For Illinois, the VA Max Guaranty is $1,000,000. But once you get over $417,000, the lender will likely ask for a down payment from the buyer. Here is a good tutorial on how those down payments may be calculated.
- Can be used to purchase 1-4 unit buildings, or 1 unit condo/townhomes, but buyer must occupy one or all of the units.
- Cannot be used to purchase 5+ unit multi-family buildings.
- No private mortgage insurance premiums (PMI).
- Mortgage is assumable meaning that you can transfer the loan with the property to a new buyer or relative. Conventional loans typically aren’t assumable. This is a huge benefit especially as interest rates are on the rise.
- Limited closing costs.
- Closing costs can be paid by seller.
- Don’t have to be a first-time buyer.
- You can re-use the benefit.
- Credit scores, payment history and debt-income ratios are still important and will be considered for the approval of the loan.
- Appraisal is still required.
- 75% of the rents from the non-occupied units will be used to help you qualify!
If you need help finding a VA Lender or a two flat, three flat or four flat in the Chicago area, I’m happy to assist.
Learn more at my website, www.chicagoREinvestment.com.