Can You Use a VA Loan to Buy a Duplex?

Most articles you read about VA loans involve financing a single family home. That’s probably because there are so many single family homes being financed using a VA loan. Yet not many may not be aware the VA home loan program can be used to finance a duplex. There are some definite advantages owning a duplex and financing it with a VA loan compared to other types of homesteads and it is something veterans should explore. You can finance a duplex as long as you occupy one of the units.

Veteran real estate investors often start out buying a two-unit property. When they discover the ease of financing a duplex with a VA loan and the ease of financing future real estate investments they begin to acquire more properties over time. One thing to note here is making sure you’re comfortable living in a home attached to another. You’ll share a wall with your tenant but with a good tenant it might be the best financial move you’ve made so far.

When you hear the term “Let someone else pay your mortgage for you” is a phrase you may have heard and what that really means is the rental income from your property is more than enough to cover the mortgage payment. And because rates are still relatively low and rents are on the rise, not only can the rent cover the mortgage but can also be enough for the annual property taxes, insurance and maintenance costs. If your total monthly mortgage payment for your duplex is $1,500 and the rental income from the other unit is $1,750, you’re mortgage-payment free and pocketing an extra $250 to boot.

The most popular feature with a VA home loan is the absence of any down payment. Not only that, but there is no monthly mortgage insurance payment required. No down payment means less cash of yours at the closing table and no monthly mortgage insurance means your total monthly payment will be lower compared to other low/no down payment mortgage program.

One final note, should you decide to move later on and keep the property as a rental, you can use the rental income from the property to help you qualify for another mortgage to buy your next property. Should you ever refinance the loan on the duplex into a conventional mortgage, you can free up your VA loan eligibility to buy yet another primary residence with zero down.

If youre ready to get started, or have more questions about buying a duplex with a VA loan, the first step is to find a lender. Our VA Loan Finder will match you with up to five lenders, with competing rate quotes, so you can find the best fit.

Buying a duplex with a VA loan is an attractive option for many military servicemembers and veterans looking to invest in rental property. The VA home loan program allows eligible borrowers to purchase a duplex, triplex, or fourplex and live in one unit while renting out the others.

VA Loan Overview

The VA loan program helps active duty military veterans, reservists, and surviving spouses finance the purchase of a home with no down payment required. Some key benefits of VA loans include

  • Requires no down payment or mortgage insurance
  • Features low interest rates
  • Allows gifting for closing costs
  • Offers flexible credit guidelines

To qualify for a VA loan you must meet service requirements and occupy the home as your primary residence. The occupancy requirement is one reason VA loans appeal to buyers purchasing duplexes or other small multi-family properties.

Using a VA Loan to Buy a Duplex

The VA views duplexes and small multi-family properties as residential, not commercial. So you can use your VA loan benefit to purchase a duplex, triplex, or fourplex as long as you live in one of the units.

Here are some key guidelines on using a VA loan for a duplex

  • You must occupy one unit of the duplex as your primary residence
  • You can rent out the other unit(s) to generate income
  • The property must meet all VA appraisal and underwriting requirements
  • Your loan amount will be based on the value of the entire property
  • You’ll need to qualify for the loan amount based on your total debt-to-income ratio

While a duplex purchase is considered a residential loan by the VA, your lender will still want to see you can manage the mortgage payment even without rental income. Expect to have your VA loan eligibility, credit, and debt reviewed closely.

Benefits of Buying a Duplex with a VA Loan

Purchasing a duplex with a VA loan offers several advantages for owner-occupants:

  • Requires no down payment – The no down payment feature allows you to purchase the property with 100% financing. You won’t need any cash upfront.

  • Avoids mortgage insurance – VA loans don’t charge monthly mortgage insurance, saving you significant money over the loan term.

  • Lower interest rates – VA loan rates are very competitive, giving you access to lower rate financing.

  • Rental income – As owner-occupant, you can collect rents from the other unit(s) to help pay your mortgage. The rental income can provide positive monthly cash flow.

  • Appreciation and equity – As the property appreciates, you build equity that can be tapped later via a cash-out refinance or sale.

  • Investment property – A duplex purchase gives you exposure to investment real estate while living on site as an owner-occupant.

For these reasons, a duplex VA loan presents an attractive opportunity for eligible military borrowers to enter the real estate investment space.

Occupancy and Rental Requirements

When using a VA loan for a duplex, you must follow occupancy rules set by the VA:

  • You must personally occupy one unit of the duplex as your primary residence.

  • You can rent out the other unit immediately with no restrictions.

  • You must occupy the duplex within 60 days of closing and occupy the home as your primary residence for at least one year.

As long as you live in one unit, you can generate rental income from the other unit(s) right away. The VA has no limit on how soon you can start collecting rents.

Duplex Appraisal Process

To qualify for a VA loan, all properties must be appraised by a VA-approved appraiser. When appraising a duplex, the appraiser will:

  • Inspect both units of the duplex
  • Determine the property’s fair market value
  • Assess the condition of the duplex and identify any necessary repairs

Your lender will use the appraised value to calculate the maximum loan amount you qualify for. Since appraisals consider the entire property value, your loan amount will be based on the combined value of both duplex units.

How Duplex Units Impact Your VA Loan

When applying for a VA loan duplex, there are two key factors impacted by the multi-unit design:

1. Your qualifying income

  • The VA allows you to use prospective rental income from the duplex units when qualifying for the loan. However, requirements vary by lender.

  • Some lenders may only consider a portion of the rents (like 75%). Others may not count any rental income unless you have prior landlord experience.

  • Get clarity from your lender upfront on whether projected rents can supplement your qualifying income.

2. Your loan amount

  • Your loan amount will be based on the appraised value of the entire duplex property.

  • With two or more units, the combined appraised value will be higher than a single family home.

  • You can qualify for up to 100% of the duplex’s appraised value with a VA loan.

Finding the Right Duplex

As you search for duplex properties, keep these tips in mind:

  • Look for units of roughly equal size, condition, and amenities to attract quality tenants and charge market rental rates.

  • Seek out properties in stable or growing rental markets to ensure consistent occupancy and rents.

  • Inspect both units carefully, looking for any repairs needed and evaluating general condition.

  • Assess the neighborhood and local schools to make sure it’s an area you want to live in.

  • Check for HOA rules that restrict leasing or have excessive requirements for rental units.

  • Drive by the duplex at different times and days to get a feel for noise, traffic, parking, and other factors.

Taking your time to find the right duplex property will pay off when you’re ready to move forward with VA loan financing.

Work With a Knowledgeable Loan Officer

The key to success with a VA duplex purchase is finding an experienced VA lender. Look for an officer well-versed in:

  • VA guidelines and requirements for 2-4 unit properties

  • Using rental income from the duplex to qualify borrowers

  • Appraising multi-family properties

  • Special challenges or conditions involved with duplex financing

Don’t assume all lenders are equally knowledgeable on the nuances of VA duplex loans. Do your homework to find the right loan officer.

Is a Duplex Purchase Right for You?

Purchasing a duplex with a VA loan lets eligible military borrowers invest in rental property while still getting in the market as owner-occupants. With no down payment requirement and rental income potential, it can be an attractive option.

Make sure you fully assess your readiness for not just homeownership, but also becoming a landlord. Consider factors like:

  • Your background in property management
  • Time commitment involved with tenant screening and upkeep
  • Financial ability to handle vacancies or repairs
  • Interest in long-term real estate investing

If you’re ready to tackle being an owner-occupant landlord, a VA duplex loan delivers major benefits that can set you up for success.

can you use a va loan to buy a duplex

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How To Use a VA Loan To Purchase A Duplex

FAQ

What property cannot be financed with a VA loan?

You can’t purchase or build a vacation home or a purely investment property with a VA loan. New construction is possible, but veterans can’t simply purchase a plot of land with the intent to build a home some day. You also can’t use this as a business loan. Again, the focus is on primary residences.

Can I use my VA home loan for a rental property?

Can I rent out my VA loan home after a year? According to VA occupancy requirements, the buyer must occupy the residence within 60 days and use it as their primary residence. Generally, homeowners are expected to occupy the property for at least 12 months. After a year, it is permitted to rent out the home.

Can I use VA loan to purchase a second home?

Yes, you technically can use a VA loan for a second home. VA mortgages even come with specific occupancy requirements to help ensure that the homes they guarantee are inhabited for most of the year. Specifically, you’ll have 60 days — in most cases — to move into your new property and start living in it full time.

Can you use a VA loan on a 4 Plex?

VA home loans can be used for any eligible 1-4 unit property. This includes any 2 unit (duplex), 3 unit (triplex), or 4 unit (fourplex) home, as long as the veteran will occupy one of the units in property. It is considered an owner-occupied purchase as long as you live in one on the units.

Can I buy a multi-unit property with a VA loan?

When considering using your VA loan benefit to buy a multi-unit property, remember that your VA lender will require compliance with VA mortgage rules and lender requirements. VA home loans secure mortgages for primary residences. Any non-residential property use must be subordinate to the property’s use as a home.

Can you buy a duplex with a VA home loan?

The good news is you can buy a duplex, a triplex or a four-plex using your VA home loan benefits. However, the property purchased cannot be used solely for investment or rental purposes, and one unit must be your primary residence. Get Started with Your Multiunit VA Home Loan. The first major consideration with investment properties is occupancy.

Can you buy a multifamily home with a VA loan?

VA mortgage rules for purchasing a multifamily home are similar to duplex rules. You can’t use your VA loan to purchase a commercial enterprise or non-residential property, and you must occupy the property. The multifamily home must meet VA loan requirements for building code compliance, foundation and location.

Can a VA loan be used to buy a home?

A VA loan can be used to purchase an existing home, build a new home, improve a home, or refinance an existing home loan. There are two types of loan programs from the VA: VA direct home loan where the Veterans Administration serves as the mortgage lender.

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