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VA Loan Reader Questions: Owning Multiple Homes

November 6, 2012

VA Loan Reader Questions: Owning Multiple Homes

A reader asks, “I am currently renting and looking to buy a modest house using a conventional mortgage.”

“I plan to live in that house and save some money, but in the future, I would like to rent it out. I would then, wish to use my VA loan to purchase my primary residence and use the benefits to purchase a house more suited for my future. is that possible?

A qualified VA loan applicant is not specifically prohibited from owning multiple homesĀ as described in the question above. However there are two factors that come into play. The first is occupancy. VA loan rules require that the borrower uses the home purchased with a VA mortgage as the primary residence. Based on the reader’s question that issue isn’t a problem.

The second issue involves the borrower’s debt-to-income ratio. The VA will examine income, job history and other factors as part of the VA home loan application process. Part of that examination is to determine whether the borrower can realistically afford the new home loan. If a VA loan applicant’s debt-to-income ratio is too high, the loan could be denied unless there are compensating factors.

Can the borrower in this case afford the addition of a VA mortgage payment to the existing financial obligations which in this case already include a mortgage payment? The loan officer and the VA will make a determination on a case-by-case basis, so there’s no set answer to the question of loan approve in the circumstances described above.

A borrower who can afford the new loan should have no trouble getting VA loan approval, assuming he or she is otherwise qualified. But for those who have marginal credit, high monthly bills, missed payments, or other issues, it may be tougher to get a lender to agree to the loan.

The key for any borrower in the situation as described in this reader question is to have a rock-solid record of on-time payments and a good credit score. Anything less could jeopardize the chances of getting a VA mortgage under such circumstances.

Do you have questions on the VA home loan process? Ask us in the comments section.

 

5 Comments
  1. Jerad Birindelli

    I am currently in the situation above. I have a FHA loan on my current home but we need a bigger house for our growing family and we plan to rent out the one that we are in currently. Will the VA require a down payment for this second loan? If so about what % might that be?We have the income to cover both mortgages and a credit score of 807. Thanks, Jerad

    • Joe Wallace

      Hi Jerad, thanks for your question. If you can meet the VA debt to income ratios and the new home will be your primary residence, you can apply a $0 down VA loan up to the county loan limits for your area. To get started, you can pre-qualify at www.valoans.com which is a private company, not a government website. Hope this helps!

  2. Jerad Birindelli

    It does! Thank you!

  3. Laura

    Hi I would like to know are landlord has a VA loan. He has had it for over 10yrs and we rent from him. Can he buy another house with a another VA loan for his self to live in? I am doing this for him. Thanks

    • Joe Wallace

      That may depend on a variety of circumstances. The VA borrower must certify the home purchased with a VA loan is to be used for the borrower's personal occupancy. If the borrower has VA entitlement remaining it may be possible to apply for a new VA loan but the VA would only guarantee the mortgage for the amount of the remaining entitlement.

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