VA loan for investment property: Can you use one?

Veterans Affairs loans give active-duty military personnel, veterans, and their surviving spouses the opportunity to buy a home. But can you buy an investment property with a VA loan? Yes, you can earn rental income from a property bought with a VA loan, as long as it’s also your primary residence. This means you can rent out part of your home – a roommate or boarder situation – or you can buy a home with up to four units, which is allowed with a VA purchase loan.

Can you use a VA loan for an investment property?

In short, yes. VA loans are meant to pay for the purchase of your primary residence, aka where you live most of the time. To use a VA loan to buy an investment property, you need

Ways to use a VA loan for an investment property

The most straightforward way to use a VA loan to buy an investment property is to buy a home with 2 to 4 units. You would live in one unit and rent out the others. Alternatively, you can buy a single-family home and rent out part of it, like a spare bedroom or guest house.

This gives you both a place to live and a source of income, which you can apply to your mortgage payment or other costs. Of course, as a landlord, you must maintain the property and pay for repairs when necessary.

Renting out space in your primary residence

The simplest way to make money by buying a home with a VA loan is to rent out part of your home.

As long as you’re using the home you buy with a VA loan as your primary residence, how and which rooms you choose to rent out is entirely up to you.

Buying a 1- to 4-unit property

If you prefer not to share your home with a roommate or tenant, you can use a VA loan to buy a property with 2 to 4 units. To do this, you must live in one of the units and would essentially be a landlord and property manager for the others. This is commonly known as house hacking.

What if you’ve already bought a home with a VA loan?

Before you use your VA loan benefit, you have a full VA entitlement, which is how much the VA will guarantee a mortgage lender if you default on your loan. This means you’re not required to make a down payment, and the VA will guarantee the lender up to 25% of the loan amount if you default.

If your loan doesn’t use your full entitlement amount, you may have a partial entitlement. This also can happen if you’re paying back a VA loan, defaulted on a previous VA loan, or repaid a VA loan and still own the home you bought with it.

It’s possible to use your remaining entitlement to get a second VA loan. However, this only can happen in a few specific instances. The most common example is active-duty military personnel receiving a permanent change of station order. You could then have a VA loan for your current home and one for a home at your new posting. You’ll need to set an occupancy date for the new home within a year of getting the second loan.

You also can turn your current home into an investment property by paying off that loan and getting a VA loan for your new primary residence. This would turn your paid-off home into an investment property.

Under all circumstances, you must be mindful of the VA’s loan occupancy requirements. If you buy a property, you must move in within 60 days. At the same time, anyone on active duty can have their spouse or dependents act as a stand-in for them.

The bottom line: Using a VA loan for investment income is possible

VA loans make home ownership accessible to military personnel, veterans, and their surviving spouses. But they also require you to reside in any property that’s purchased. To use one to buy an investment property, you’ll need a multiunit home or rent out a bedroom or guest house in your home.

Ready to use a VA loan to buy investment property? You can apply for your initial approval with Rocket Mortgage^® today. Once you’ve done so, you’ll be ready to pounce on the perfect property and make an offer the moment that you find the right opportunity.