Can You Use a VA Loan for Rental Properties?

Lately, you’ve been seeing a lot of ads for buying investment properties with a VA loan.

Can we do it now?

The answer shortly is no, you cannot buy an investment property with the VA loan.

Now, what I’m getting at is a lot of folks that we work for – again, we work for a lot of active duty military moving around the country.

They’ll often times ask, “Hey, I want to buy investment property while I’m at my new location. I want to use that VA loan” because they’re seeing it somewhere, ads they’re seeing, clicks on some Facebook groups, folks are telling them, “Oh yeah, I use my VA loan to buy this investment property.”

They assume that one can work.

The reality is you cannot buy an investment property with a VA loan.

However, want to put a big however, you can rent out a home that you happen to be living in that was your primary residence with a VA loan.

So, there’s a couple of ways that you really can have somewhat an investment property up front with a VA loan, but for sure later on when you move.

Let’s say you PCS, you’re active duty, and you PCS to a new location – you can use that home as a rental property.

The two major areas where we see this for folks is, number one, they buy a property and they live in it for 3 to 5 years at one location.

Then they get orders to move to a new place and they decide they want to rent that home out.

Happens very often.

That’s perfectly fine, and they keep that VA loan and they’re renting the home out.

It becomes a rental, but they had bought it and originally lived in it. It was their primary residence, that is just fine.

The other scenario -number two – is where we’ll see folks purchase a duplex, triplex, or quad, a 4-unit property, and they’ll live in one of the units and rent out the others. And you can use a VA loan on those types of properties.

So, you can use a VA loan on a duplex, triplex, 4-unit property and make it work just fine right out the gate.

Whole bunch of clients where we’ve done that, where they buy one building. They live in one of the units. They go from there.

Now, if it’s beyond four units, that’s where VA loan falls off. That falls into commercial loans and doesn’t work.

But a single-family residence technically can be either a single unit like your traditional home that you might think of, a duplex, a triplex, or that quad, 4-unit, some folks refer to them as.

And that’s a scenario where all of a sudden you can essentially have investment units within your primary residence, right?

In those scenarios, it works.

And then I guess kind of almost a 1-a also would be that some folks we’ve had, they do what they like to call house hacking.

They purchase a home as our primary residence and maybe they end up having a buddy or two live with them and rent out part of the rooms or whatnot.

As long as it’s your primary residence and you’re living there using that VA loan then that can potentially work for you as well.

So, know this, you cannot buy a traditional investment property with a VA loan.

That means like, okay, hey Sally selling her house across the street, I’d love to own it and stick a renter in there right away – doesn’t work.

But if Sally’s selling her home and you say, you know what, I want to go move into that home and then when I leave here again, I’m going to rent it out, that can be okay.

The VA likes to see you there, ideally for at least a year.

But, there are some exclusions to that.

Like if you got orders to move real quickly, or had a job change of some type, big family circumstances, married kids, that kind of stuff.

Those could all qualify you for being able to move prior to that year, typically like to see a year or longer at least to make sure that home is your primary residence again.

My name is Evan Kaufman, your VA loan originator. VA loans are what we do and hopefully this helps you go out there and win a home with a VA loan. Take care.