Properties You Can Buy with a VA Loan

Properties You Can Purchase with a VA Loan

Are you interested in a Veterans Administration (VA) home loan, but wondering if there are any restrictions on the type of property you can buy? VA loans are designed to help active duty military personnel and Veterans become homeowners at an affordable cost. There are many types of properties covered under your VA loan including single family homes, condos, manufactured homes, and even multi-unit residences.¹ But before you start house hunting, you’re wise to do your research, explore your options, and understand what restrictions might apply.

Types of Homes You Can Purchase With a VA Loan

VA mortgages offer you some variety on what kind of home you might purchase. These include a:

• Traditional detached house
• New construction home
• Condo
• Manufactured home
• Two-, three- or four-family property, as long as you live in one of the units

Before you get excited about purchasing a new condo, keep in mind that the building must be on a list of approved condo projects if you want to buy it with a VA loan. Be sure to check the list of thousands of approved condominium complexes on the VA’s website before you begin your new home search.

And if you’re thinking, well why isn’t the one in my neighborhood on the list? Maybe I can change that. You can’t. Applying to be on the approved list must be done by the management company or homeowner’s association. If you have your heart set on a particular condo that is not on the approved list, consider applying for a conventional loan.

Special Considerations for Rental Properties

While VA loans cannot be used for investment purposes, if you’re going to live in one unit of a multiunit property, you may be able to use your VA benefits. However, the rules to buy a multi-unit home may be stricter than with a single-family dwelling. You will need to have a strong credit history. VA lenders may ask that you have as much as six months’ worth of mortgage payments in savings to include principal, interest, taxes, and insurance in case your tenants fail to pay their rent on time or if a major repair is needed. On the other hand, when the lender calculates your monthly expenses to see what you can afford, they will offset that with 75% of the potential income from the rental units. And the VA lender might also ask if you’ve had any previous landlord experience and whether you’re able to perform necessary repairs and maintenance.

Types of Properties You Can Not Purchase With a VA Loan

• Second homes: You can’t purchase a beach house or ski cabin with a VA loan unless it will be used as your primary residence. A primary residence is generally defined as one that you live in for at least six months and a day every year. So if, for example, you’re retired and want to buy a vacation property with a VA loan, you would have to plan to live there for more than half the year.
• Vacant land to build on later: Land purchase for the build of a future home is not allowed under VA loan terms. However, land as part of a simultaneous new home construction would be.
• Co-ops: Housing cooperatives are excluded. When you buy a unit in a co-op, you're buying shares in the corporation that owns the building. Technically you're not buying actual real estate but rather purchasing the exclusive right to live in that particular apartment. Therefore you can’t use a VA loan to buy into a co-op.
• Rental properties that are not your primary residence: You can’t use a VA loan to buy rental properties, unless you live in one unit of a multi-family house. VA loans are meant to help you buy and live in your own home and cannot be used for speculation or investment properties.

Would you like to learn more about how to obtain a VA home loan to buy or refinance? Turn to the expert loan team at NewDay USA. We are a nationwide VA mortgage lender focused on helping active military personnel, veterans, and their families achieve their financial and housing goals. Call us today at 844-451-1589 to learn more about any of our VA home loan products.

¹ https://www.va.gov/housing-assistance/home-loans/loan-types/purchase-loan/