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VA Loans for Financing Your First Real Estate Deal

VA Loans for Financing Your First Real Estate Deal

VA loans make another great option for financing your first real estate deal. Special thanks to Elizabeth Colegrove who’s article inspired much of this blog post.

The first thing that’s important to note regarding this option for real estate financing is that is limited to veterans.

What is a VA Loan?

That’s right, VA (Veterans Administration) loans are federally subsidized loans only available to U.S. military veterans. So, you’ll find this article particularly useful if you or your spouse has served in the military and are looking to invest. Read the section below to learn more about who qualifies for VA financing.

This is in no way an exhaustive guide on VA loans. This will point you in the right direction and give you some of the basic information before you start your more in-depth homework.

Benefits of VA Loans

There are many benefits of a VA loan for qualified investors, as well as a few drawbacks.

The good news about these loans include:

  • No money down (0% down) payment financing option
  • Easier to qualify than FHA loans
  • Beneficial terms
  • Multiple loan limit

On the flip side, the downside is:

  • Slow closing process like FHA loans
  • Though there is a multiple loan limit, this is based on your maximum entitlement
  • Heavy rehab properties do not qualify

Who Qualifies for VA Financing?

VA loans are only eligible to owner-occupied veterans.

That’s right, VA loans are only good for you if you or your dependents are willing to live in the property being bought. Since it is a federally sponsored program, there are limits to what can be purchased with this type of loan.

Here’s a list of the five types of properties you may purchase:

  1. Home or condo unit in a VA-approved development
  2. Home built from the ground, up
  3. Fixer-upper home – but not in too bad of shape
  4. Home that needs energy-related improvements
  5. Manufactured home and/or lot

These loans are good for live-in flips and 1–4-unit properties.

Where to Find a VA Loan

You can find a VA loan in the mortgage department of many local banks, mortgage brokers, credit unions, and large mortgage lenders.

Fees Involved

One of the attractive features of VA loans is that you pay no PMI (private mortgage insurance). However, there are funding fees, as with most all loans. The funding fees is determined based on the number of properties you are borrowing for. As a general rule of thumb, these fees increase with the number of properties and are rolled into the loan price.

But wait, there’s good news even about this!

There is a way to waive these funding fees if you have a certain VA disability rating. You may be eligible to waive the fees or be reimbursed.

Learn more about VA home loans here:

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Read next article in this series:

Part 1     Part 2     Part 3    Part 4     Part 5     Part 6