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The Veteran’s Guide: Types of Loans for Investment Properties

There are about 18 million veterans in America. They are soldiers who served in the military, naval, or air services. Veterans qualify for government loans to help them buy a home with favorable terms.

Did you know the different types of loans for investment properties for veterans? Keep reading this guide to learn more about these loans.

What Is a VA Loan?

A VA loan is a mortgage loan for veterans established by the US Department of Veterans Affairs. These are available for active and veteran service personnel and their spouses. These loans can help veterans buy or build a home or improve and repair their current one.

The Department of Veterans Affairs sets qualifying standards and mortgage terms. They also back the loan instead of financing it. VA loans come from private lenders such as banks and mortgage companies.

Borrowers need to provide the lender with a certificate of eligibility from the VA. The borrower should produce service-related documentation for the eligibility certificate. These documentations will vary based on whether the borrower is active or a veteran.

One of the requirements to get a certificate is being on active duty for at least 90. Being in the Selected Reserve or National Guard for at least six years also qualifies. The veteran can also use the certificate more than once after paying off their first loan.

Benefits of VA Loans

VA loans are the top mortgage options for active military personnel and veterans. These loans help veterans and their families achieve their dream of homeownership.

One of the top benefits of VA loans is their competitive interest rates. VA loans are usually 0.5 to one percent lower than other interest rates. It allows veterans to save more money in the long run.

There is no private mortgage insurance with VA loans. Private mortgage insurance protects the lenders. Borrowers usually pay a fee until they build a 20 percent equity in the home.

Credit requirements for VA loans are usually low. Veterans can avail of VA loans for investment property with low credit scores. It means veterans can secure home financing at competitive interest rates.

All mortgages charge borrowers with fees and closing costs. But, VA loans limit the charges needed from veterans. In some cases, the lenders will cover the closing costs.

Some of the benefits of VA loans include the lack of down payments unless needed. These loans give veterans the option to buy various properties. It can be condos, conventional houses, and existing houses.

Loans or property finance for veterans don’t need prepayment penalties. These penalties help lenders recoup some of the money they lend. VA loans allow borrowers to pay off their homes without worrying about the penalties.

The Types of VA Loans

The different types of VA loans come with various benefits. Comparing the features and options can help you choose a loan that suits your needs.

In America, the Real Estate Sales market size was over $200 billion in 2022. This industry continues to grow because of the need for housing. VA loans can help veterans buy a house in the current real estate market.

Purchase loans are one of the standard forms of a mortgage under VA loans. It allows veterans to buy a property with zero down payment. First-time homebuyers can avail of this loan.

VA cash-out refinances loans allow the borrower to replace their current loan. The refinanced loan will be under different terms. These loans usually have higher interest rates compared to purchase loans.

Cash-out refinances loans are for borrowers who want to take cash out of their home equity. The reasons can be to pay off debt or pay for school. Some borrowers use the money for home renovations and even take care of other needs.

Interest Rate Reduction Refinance Loans are low-interest rate options for veterans. Qualified individuals can refinance their VA loans at zero costs. IRRRLs also offer borrowers the choice to adjust their loan’s variable interest rate.

Veterans can also avail of a VA Renovation loan for home improvement. It provides an opportunity to buy a home that might not meet the VA purchase loan requirements. One of the requirements is hiring a VA-approved contractor for the renovations.

‌‌Types of Loans for Investment Properties

There are plenty of options when it comes to loans for investment properties. It can range from borrowing from traditional banks to real estate lenders. These loans can help veterans buy rental properties that can generate passive income.

Conventional loans are one of the types of loans for investment properties. Banks and mortgage brokers offer these loans. They also reward good credit scores with lower interest rates.

Federal Housing Administration loans are great options for new construction or renovation. Mortgage brokers and lenders can offer this without the need for good credit scores. The borrowers can also use existing property rental income to qualify.

Portfolio loans can finance one or more rental properties with the same lenders. These loans usually come with higher fees because of less strict requirements. The lender can also customize the interest rate and terms to fit the borrower’s needs.

Borrowers can also seek loans from private investors. These loans can benefit future rental property investments. Lenders can customize the loan terms and fees to match the deal potential of the borrower.

A blanket loan is one of the options for financing many rental properties. These loans can refinance existing property loans under a blanket mortgage. Other properties under the blanket will serve as collateral for the others.

VA Loan for Investment Property

These are the types of loans for investment properties available for veterans. It can help veterans buy homes through loans with favorable terms. They’re available to active and veteran service personnel and their spouses.

VA loans are more generous compared to other mortgages. There are no down payments needed unless the lender asks. The Veteran Affairs will also offer help to veterans in case they are unable to make payments on time.

Contact us for questions about passive income opportunities for veterans.

Kelly Madden

Kelly Madden

Kelly is a 14-year Air Force spouse, real estate agent, real estate investor, and virtual assistant. After starting out as an intern with ADPI in 2019 and later acting as ADPI’s blog coordinator in Jan 2020, Kelly is thrilled and honored to take on the role of ADPI’s new Community Manager as of November 2020. She looks forward to building our community and supporting our members throughout their real estate investing journey.
Kelly Madden

Kelly Madden

Kelly is a 14-year Air Force spouse, real estate agent, real estate investor, and virtual assistant. After starting out as an intern with ADPI in 2019 and later acting as ADPI’s blog coordinator in Jan 2020, Kelly is thrilled and honored to take on the role of ADPI’s new Community Manager as of November 2020. She looks forward to building our community and supporting our members throughout their real estate investing journey.
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Our team strives to educate, mentor and empower active duty service members, veterans, spouses and military families to reach financial freedom through creating passive income through real estate investing. Our goal is for Active Duty Passive Income (ADPI) members to own as much of America as possible.