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A Guide to Using VA Loans For Investment Properties

Did you know that you can use VA loans to do just about anything you like? If you have been in military service, you know that you can get a VA loan. You can use this money for investment properties and make your life better in different ways.

VA loans are meant to help military members and veterans to be able to afford their homes. However, some servicemen and women would like to use the loans to invest in property.

There are a few circumstances that can allow you to use the loan for such use.

Requirements For Using VA Loans For Investment Properties

To earn money from a property you have financed using VA loans, there is some requirement you need to meet:

Have Military Service

Before you can even consider applying for a VA loan, you need to ensure that you have military service requirements. This means that you or your spouse should be a veteran or an active military member.

You can use your spouse in the military if you are co-buying the home. One of the major requirements is that you should have served for a certain number of days in the military.

These requirements are very specific, and they depend on where you served. You can easily find out if you qualify from the VA records.

Ensure that you are eligible for a loan before you proceed any further with the application. The department of veterans will issue you with a certificate of eligibility if you do.

How to Get a VA Loan with Bad Credit

Live In The Property

As mentioned earlier, the VA loan is to help you own a home. If you need to use it for real estate investing, you will need to use the home as your primary residence first. After you close the loan, you will need to move into the house within 60 days.

This means that you need to purchase more than one unit and use one as your primary residence.

The lender should verify that you intend to live in the home for at least 12 months.

This means that you can use the VA loan to buy a vacation property. Ensure that you talk to your lender if you want to buy another home before you start the application process.

Not More Than Four Single-Family Units In The Property

After you get the property you want, you should not have more than four family units living there. If there are more than four units, you will not qualify for any financing.

You can therefore acquire a duplex, triplex, or quadruple, but you cannot buy a big apartment complex.

If you are looking at using the VA loan for real estate investing, you need to make sure you comply with all the requirements. Lenders will help you with the type of homes you can build to ensure you qualify for lending.

How To Use Rental Income To Get VA Loans

When you have checked and are eligible, you can plan to acquire real estate to get passive income. If you own your home, you might need to get more units to make some money from them.

For this to happen, you will. Need to have a cash reserve that can cover up to six months of your mortgage payments. Ensure that you are also registered as the landlord of the property.

You can get a rent appraiser to help you collect 75% of the rent on the property. This means that you will use future income to qualify for a loan.

Although it may not be easy to convince a lender that your income is stable, you can prove this using your history.

If you want to use the future income, you should have at least two years of experience as a landlord.

Types Of Loans

There are different types of loans for veterans that you can get when you need to invest. This is because there are more than $20 million loans available.

This has been guaranteed by the department of veterans from the year 1944. This means that you can get a loan without paying a down payment.

VA Loans

Veterans and military members in active duty can get a VA loan for their benefits. However, not many members know how these loan works even though they may be eligible.

Loan experts in the VA unit can help with details on how to apply for the loans. You can also find out if you qualify for the loans available for service members and veterans.

It is important to note that the loan will not come from the department of veterans affairs. They only guarantee the loan that is provided by lenders. This means that a portion of the loan is covered if the borrower defaults.

The following are some facts about the VA loans:

You can make extra payments on the loan over the timeline of the loan. This means that you will be able to pay off the loan sooner. It will help you save money in interest when you are paying off your loan.

Any other loan that you wish to take, like investment property, is subject to lender approval.

Not every property is eligible for loans. For example, vacant land may not be eligible, but it can be used with a construction loan. Cooperatives can also not apply for the VA loan benefits.

There is a funding fee that comes with the loan. You need to pay the fee to help ensure that the loan will continue because it does not require a down payment.

This is because there is no monthly mortgage insurance when it comes to these loans. The fee has been taken out because of the VA funding.

Make Passive Income Using VA Loans

Many military service members do not have a lot of options when it comes to making extra income. This is why there are programs meant to help them out. 

You can become a homeowner and a landlord even though the VA loans are not intended for use in investment properties. Contact us for help on how you can use your VA loans to earn passive income.

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.