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How to Purchase a Multi-Family Property Using the VA Loan


In a previous post, we mentioned that as of January 2020 the county limit for the VA loan has been removed which will open up some unique investment opportunities for those eligible for a VA loan. One very common investment opportunity is the ability to buy multi-family real estate. A multi-family property is a house or development that can also be referred to as a 2, 3, or 4 family house. Each unit is typically separated to be considered its own apartment. There are some things you need to know before you go out to use your VA loan for that type of investment though.

The first thing to keep in mind when purchasing a multi-family property with a VA loan is there must not be more than four units in the development or building. The benefit to making this kind of investment is the rents that you're receiving from tenants other than yourself are actually going to be used as qualifying income for that purchase. Instead of only looking at your income to qualify you for the loan the rent received will also be factored into your income which will allow you to qualify for a larger loan amount. Keep in mind, only 75% of the gross rents will be able to be used though. Hypothetically, let's say you purchase a four-unit multi-family with the VA loan, the three units outside of yours rent for $100,000 a year. That means that you'll actually get credit for $75,000 a year of additional income to help you to qualify for that loan. That could mean you being able to double your purchase price based on the income that you may have today.

The next thing to keep in mind is that those can't be hypothetical tenants. You actually have to have signed, active leases in place in order for the VA to allow you to use those to qualify. Having active tenants with signed leases verifies that you will be receiving rent from the tenants which helps you qualify for a larger loan amount.

The next thing to keep in mind is that you yourself are going to have to occupy one of those

units or at the very least have an intention to occupy. for unforeseeable circumstances, orders

elsewhere, et cetera that may take you out of it. Obviously, there are conditions that are in place to

make sure that for unforeseeable circumstances, orders elsewhere, et cetera that don't prevent you from being able to purchase the property.

Last but not least, if you have not been a professional property manager, meaning that you have managed other properties for at least a year, the VA is going to require that you hire a property management company to professionally manage those properties other than your unit when you are getting qualified for the loan.

Using the VA loan for a multi-family property is a great investment that can bring in passive income. As always, if you have any questions regarding this type of purchase or any other kind of home purchase reach out to a Sentry Residential agent to help get you started.


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