VA Loan Reader Questions: Multi-Unit Properties
A reader asks, “How about if I purchase a multi-family home, say 4 to six families, that I intend to use as my primary and legal residence? Will the VA guarantee the loan?”
The VA loan program allows a single eligible borrower to purchase a residence with between one and four units.
The borrower is required to live in one of units as his or her primary residence, but is free to rent or otherwise allow others to use the unoccupied units of the property. Under some circumstances with more than one borrower, additional units may be possible, but it depends on the nature of the loan and other factors.
The Department of Veterans Affairs lists several requirements–including the occupancy rule–for all properties including multi-family units–on its official site. When buying any type of home with a VA loan it must meet VA minimum property standards (MPR).
A home that does not, whether a single or multi-family unit, must be able to be modified to comply with VA MPRs and local/state/federal building codes where applicable. Co-ops are not eligible for VA loans unless they are on or are added to a list of VA approved projects.
VA loans also cannot be made for any property located in a flood hazard zone where flood insurance is not available, and depending on the location near certain airport high noise zones there may be additional questions about the nature of that noise zone. All of these items are mentioned because it’s easy to assume that ANY property is eligible for a VA loan as long as the borrower qualifies for the mortgage.
This is not true–the borrower and the lender’s interests are protected under the VA Minimum Property Standards requirement. The borrower must be able to resell the property at some point if he or she chooses to do so, and the lender needs the property to be able to secure the home for the lifetime of the mortgage at its current appraised value or better.
That is why VA minimum standards apply. For more information on these and other rules on purchase homes with a VA mortgage, ask us in the comments section.