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VA Loans and Multi-Family Homes

Learn about how a homebuyer can use a VA Loan to purchase a multi-family home and the requirements needed to do so.

Published on January 7, 2021

Not everyone looking to use their VA loan benefit is interested in a single-family home. In fact, the VA finances several different types of properties, one of them being multi-family homes.

The reasoning behind deciding to purchase a multi-unit property depends on the buyer, but there can be some serious pros to doing so. Whether you are looking to live right next to your family, or are interested in renting out the extra units for supplemental income, a VA mortgage can help finance a multi-unit property.

VA Loan Multi-Family Unit Requirements

Multi-unit homes are a single building with multiple units inside. These are commonly referred to as a duplex, triplex, or fourplex. Because these buildings have multiple occupants, they must meet some unique requirements.

Beyond traditional VA loan requirements, VA lenders will also want to see the following requirements met before financing your multi-family property.

Each unit must have:

  • Their own utility services
  • Shared water, sewer, gas and electricity lines

The multi-unit property is permitted to have common areas such as laundry and storage rooms, but the VA requires that each living space must be self-contained for privacy.

Pros of Multi-Family Homes

1. You can purchase a multi-unit home without a down payment.

Since the price of multi-family homes is likely going to be more expensive than purchasing a single-family home, you are going to save some serious money on a down payment.

2. You can buy up to 7-units with a joint VA borrower.

Typically speaking you’d only be able to purchase a four-unit property if it were just you on the loan. However, with another VA borrower, you can maximize the potential.

3. You can make extra income.

While VA occupancy requirements state you must live in one of the units for 12-months as your primary residence, this doesn’t mean you can’t rent out the other units for supplemental income

Cons of Multi-Family Homes

1. You typically need prior property management experience to count rental income.

While all the extra income sounds great, not everyone is cut out for it. VA lenders recognize this and typically require you to prove you’ve had at least two years of landlord experience before they will approve the loan.

2. You could have a messy appraisal experience.

Since you may be looking to purchase up to four-units with your VA home loan, you’ll have to make sure each unit gets a proper appraisal. While this is a relatively quick process for single-family homes, the process can be much more time, and money consuming.

3. You will be neighbors with your tenants.

At the time of purchase, you must be using one of those units as your primary residence. While this doesn’t seem unpleasant now, being easily accessible to all of your tenants’ wants and needs may be off-putting.

VA Loans and Investment Properties

VA loans cannot be used solely as investment properties. This benefit is intended for Veterans to use for their primary residence that they will occupy full-time.

However, most VA lenders allow buyers to purchase multi-unit properties with up to four units in total. The VA borrow must use one of those units as their primary residence.

As with many facets of the VA home loan benefit, be sure to check with your lender to verify your eligibility and to make sure your property meets all the necessary requirements.

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