More than 22 million VA home loans have been approved for military and veteran families, securing homes for families across the U.S. But can VA loan benefits be used to buy an investment property? Is it possible to use the VA home loan for a property that isn’t your primary residence?
An investment property can be one that you buy and flip, keep for rental income or purchase for certain tax benefits. Because the VA home loan program is designed to put military families into their main home, the loan cannot be used to purchase single-family houses with the intention of using them as investment properties.
However, there are two workarounds to the regulations that allow you to obtain an investment property with a VA home loan.
Use VA Loan For Investment Property
It is possible to use the VA home loan program to buy a multi-family property and use a portion of that space for rental income. For example, you can make money as a landlord on a home that has a living space over a garage or an in-law suite, a duplex, or a residence with multiple living areas.
As long as you’re living on the property, the VA loan can fund the home purchase. So, you can live in the main home while a tenant lives in the in-law suite, giving you additional cash flow from rental income.
A second way to acquire an investment property with a VA loan is to buy a primary home, live in it for a while, then transition it into an investment property. You can then use your remaining VA home loan benefits to buy a new primary residence for your family. During the VA loan application process, you’ll be required to certify that the new home will be one you live in full-time and will serve as your main home, not an investment or vacation property.
Pros & Cons Of VA Loan For Investment Property
Using a VA loan for an investment property comes with different mandates, which means you should consider if those requirements would affect your quality of life. Being a live-in landlord isn’t for everyone, but there are some benefits to the situation.
- Rental Income: You bring in extra money to set aside for savings, pay off debt, or meet other financial goals.
- Low Risk: Managing tenants who live on your property is typically easier than dealing with tenants who are a few states away, or even across town. Because you see the tenant on a regular basis, they’re more likely to properly care for the property and pay in a timely manner.
As with any investment property, it’s best to crunch your numbers to ensure you can afford the mortgage and your lifestyle without the rental income. You don’t want to rely on a tenant as a necessity to pay the home loan. Other challenges to consider:
- Shared Space: Consider what it will be like to have a tenant living in your home or adjacent property. A tenant’s level of cleanliness, work schedule, or other lifestyle factors has the potential to make the arrangement uncomfortable.
- Constant Need: Your proximity to a tenant means they have access to request changes or improvements to their space at any moment.
Using the VA loan program to create an investment property is possible, but you’ll need to consider the key differences to determine if that style of living and managing tenants is right for your portfolio.
It is possible to use the VA home loan program to buy a multi-family property and use a portion of that space for rental income. For example, you can make money as a landlord on a home that has a living space over a garage or an in-law suite, a duplex, or a residence with multiple living areas.
As long as you’re living on the property, the VA loan can fund the home purchase. So, you can live in the main home while a tenant lives in the in-law suite, giving you additional cash flow from rental income.
A second way to acquire an investment property with a VA loan is to buy a primary home, live in it for a while, then transition it into an investment property. You can then use your remaining VA home loan benefits to buy a new primary residence for your family. During the VA loan application process, you’ll be required to certify that the new home will be one you live in full-time and will serve as your main home, not an investment or vacation property.Using a VA loan for an investment property comes with different mandates, which means you should consider if those requirements would affect your quality of life. Being a live-in landlord isn’t for everyone, but there are some benefits to the situation.
- Rental Income: You bring in extra money to set aside for savings, pay off debt, or meet other financial goals.
- Low Risk: Managing tenants who live on your property is typically easier than dealing with tenants who are a few states away, or even across town. Because you see the tenant on a regular basis, they’re more likely to properly care for the property and pay in a timely manner.
As with any investment property, it’s best to crunch your numbers to ensure you can afford the mortgage and your lifestyle without the rental income. You don’t want to rely on a tenant as a necessity to pay the home loan. Other challenges to consider:
- Shared Space: Consider what it will be like to have a tenant living in your home or adjacent property. A tenant’s level of cleanliness, work schedule, or other lifestyle factors has the potential to make the arrangement uncomfortable.
- Constant Need: Your proximity to a tenant means they have access to request changes or improvements to their space at any moment.
Using the VA loan program to create an investment property is possible, but you’ll need to consider the key differences to determine if that style of living and managing tenants is right for your portfolio.
