VA Loan for Multi-Unit Homes
Veterans and military service members may be able to use a VA home loan to earn rental income. Though these VA-backed home loans are traditionally associated with single-family houses, you can use a multi-unit VA home loan to purchase a duplex, triplex, or fourplex. Any rent you earn can supplement your income or even help you pay your mortgage faster.
- Veterans and military service members can use VA home loans to finance multi-unit homes, provided they live in one of the units.
- Multi-unit VA loans offer the same advantages as single-family VA loans, including a zero-down payment option, low interest rates, and no private mortgage insurance.
- Multi-unit homes must meet the VA’s minimum property requirements, and borrowers must meet the lender’s credit and income requirements.
Veterans Guide offers information and tools to help veterans maximize their VA benefits, including VA home loans.
Can I Use a VA Loan to Purchase a Multi-Unit Home?
VA home loans help veterans, active-duty service members, and qualifying surviving spouses buy, build, or improve a home or refinance a current home loan. Private lenders, such as banks and mortgage companies, provide the loans, with the government guaranteeing a portion. This guarantee enables lenders to offer more favorable terms and interest rates.
You can use a VA home loan to purchase a multi-unit residential property. However, the following restrictions apply:
- Residency: You must use one of the units as your primary residence. VA loans cannot be used to purchase properties solely for rental income or investment purposes.
- Type: You may purchase a home with commercial space, but it must be 25% or less of the home’s square footage.
- Size: The home you purchase must have four units or fewer.
- Condition: Any home you purchase must meet the VA’s minimum property requirements, or MPRs.
Generally, any home you purchase with assistance from the VA must be move-in ready and primarily intended for your use as a residence.
Benefits of Using a VA Loan for a Multi-Unit Home
Purchasing a multi-unit property offers the potential for earning rental income from the other units. That extra money can be beneficial, especially if you’re navigating the transition back into civilian life or dealing with a service-connected disability.
VA loan benefits are the same regardless of whether you buy a single-family or multi-unit home—the VA guarantees a portion of the debt with your private lender. For applicants with full entitlement, the VA offers the lender a guarantee of 25 percent of the loan amount over $144,000. However, your loan limit may be reduced if you already have an outstanding VA loan.
Because of this loan guarantee, lenders can offer lower interest rates, a higher borrowing limit, and more generous repayment terms. You also won’t have to purchase private mortgage insurance, or PMI, with a VA loan. A down payment generally isn’t required, either.
You still must meet the private lender’s requirements for a home loan, though options are available if you have bad credit.
Counting Income When Purchasing a Multi-Unit Home
While renting out units in a multi-family property is a great way to earn some extra income, that may not necessarily translate into qualifying for a larger loan. The bank may not factor in the rent you could receive when calculating your income, especially if you’re a first-time landlord.
For example, suppose you purchase a duplex with a $2,000 a month mortgage. You expect to make $1,000 a month by renting out the other unit. However, the bank may still verify that you can afford the entire $2,000 monthly mortgage. After all, it may take you a month or two to find a suitable tenant, or the unit might sit empty for a few months between tenants.
Each private lender is different, but most will require evidence that you have either the income or the savings to afford the full mortgage payment. They may be flexible on some requirements if you’ve previously been a successful landlord.
Many veterans choose to get pre-approved with a lender before beginning the process of finding a multi-unit property, so they know how much they can afford and avoid any last-minute surprises.
Frequently Asked Questions About Buying a Multi-Unit Home With a VA Loan
From VA loan requirements to how to complete the necessary forms, we’re here to answer your questions. Here are some common questions we receive from veterans about VA loans for multi-unit properties:
Can I Rent Out All the Units in a Multi-Unit Property With a VA Loan?
You must use one of the units as your primary residence. VA loans cannot be used for rental or investment properties.
How Many Units Can I Buy With a VA Loan?
You can buy a property that contains up to four units.
Can I Buy a Multi-Unit Home and Live in One of the Units With a VA Loan?
You must use one of the units as your primary residence to be eligible for a VA loan.
What Happens if the Multi-Unit Home Doesn’t Meet the VA's Minimum Property Requirements?
If the home you want to purchase doesn’t meet MPRs, you may negotiate with the seller about making repairs to get the property up to the VA’s standards. In some cases, you may be eligible for an MPR waiver, provided the appraiser determines the home is safe, sanitary, and structurally sound.
Can I Use a VA Loan for a Multi-Unit Home That’s Been Renovated or Needs Repairs?
You can use your VA loan on any property that meets the VA’s MPRs.
Secure Your Multi-Unit Home With a VA Loan
For many veterans, purchasing a multi-unit home with a VA loan makes good financial sense. The benefits of a VA loan, including no down payment and lower interest rates, can help you own your own home as well as bring in rental income every month.
