Veterans no longer on active duty often find themselves looking for ways to supplement their income. An excellent option is to consider using a VA loan to buy a multi-family home. Doing so accomplishes two things: It gives you and your family a beautiful new home and generates extra income from tenants.

What Is Considered a Multi-Family Home?

A multi-family home is usually a single building that contains two, three, or four units for separate families.

The VA requires borrowers to live in one of the units while renting the others out to generate additional income. While borrowers are not required to live in the home every day of the year, they must move into the property and use it as their primary home within 60 days of closing their loan.

Using a VA loan to buy a multi-family home is excellent for developing home equity and adding a second source of income. The extra cash can offset some (or all) of a veteran’s monthly mortgage payments.

What Are the Advantages of Using a VA Loan to Buy a Multi-Family Home?

There are several benefits of buying a multi-unit home with a VA loan.

  • If the borrower has enough VA loan entitlement, they can purchase a multi-family home without making a down payment.
  • Borrowers do not have to pay mortgage insurance when using a VA loan.
  • A joint-loan option allows 2+ veterans to purchase a multi-family home with up to seven units.

What Are the Requirements of Using a VA Loan to Buy a Multi-Family Home?

As previously mentioned, the borrower must agree to live in the home. They can reside in one unit and rent out the others, but they can’t rent all units as an absentee landlord. In addition, VA home loans cannot be used to purchase commercial property.

The VA requires multi-unit homes to be taxable real estate property and must be affixed to a permanent foundation. The house must have separate utility services for each unit or, at minimum, separate shut-offs for each unit’s electricity, gas, and water.

Multi-family homes can have two to four units. Borrowers may be able to purchase a property with up to seven units if they apply using a joint VA loan.

Additionally, multi-family homes purchased with VA loans must meet local and state building codes, health regulations, and other guidelines, which is especially important for properties with wells and septic tanks.

The VA will not approve the loan if the home is in an area with a Homeowner’s Association that restricts property owners from freely selling their home. VA borrowers are not allowed to be placed under a “right of first refusal” clause, requiring them to let their HOA purchase their property before attempting to sell it to anyone else.

Lastly, the home’s “life expectancy” must exceed the loan term, typically 15-30 years.

What Are the 10 Steps for Buying a Multi-Family Home With a VA Loan?

Step 1: Check to see if you meet the minimum service requirements for receiving a VA loan. Veterans and active service members must prove they qualify for a VA home loan. Eligible and surviving spouses may also qualify for this program.

Step 2: Check with your lender about their multi-family loan limits.

Step 3: Meet the requirements of the VA and your lender, which may include some of the following: credit score of at least 620, a debt-to-income ratio of less than 41%, a minimum of two years of employment history, extra cash reserves, a VA funding fee of 1.40% – 3.60%, and proof of rental property experience.

Step 4: Get a home appraisal. Financial institutions must get a VA appraisal for multi-family homes. The appraiser will estimate the home’s value and ensure it is structurally sound and meets all property requirements.

Step 5: Contact your VA-approved lender, who can help you get the best deal possible and walk you through each transaction step.

Step 6: Hire a knowledgeable, “VA-experienced” real estate agent who understands the nuances of the process.

Step 7: Let your lender and other professionals guide you to closing. Ensure you answer their questions accurately and provide all necessary documents as soon as possible.

Step 8: Close on your VA loan. Your lender, real estate agent, and other professionals will guide you on what you should do leading up to closing day.

Step 9: Move into your new home within 60 days of closing.

Step 10: Find tenants and come up with a rental management plan. You may work with a real estate agent, attorney, or property management company to iron out this last step.


Do you have questions about buying a multi-family home with a VA loan? Please call our expert mortgage team or email us – we can help! For more information on real estate investing and evaluating investment properties, please take a moment to visit our exclusive video library. The library is updated weekly, so check back frequently for more intriguing content!