Able to leverage 100%, but should I?

[Cosette Trantow]

Hello everyone! I hope y'all are enjoying your day. I would like some advice. I am able to get a VA loan and buy a house with no money down. I was originally thinking about using an FHA loan so as only put 4% down, but now I'm wondering if I should go that route. If I do I have to wait for a while in order to save up money for the down payment as well as any rehab money and closing costs. I would be purchasing a multi-family so that I could house hack.

What would the pros and cons be to using my VA loan and not putting any money down? I would think that it wouldn't be a good thing to be 100% leveraged, but it would definitely get me started on my REI journey sooner. Please let me know what you think.

[Joe Villeneuve]

Originally posted by @Nathan Gesner:

If it's for your own personal residence I see nothing terribly wrong with it, assuming you are fiscally responsible and stable. If it's for an investment, I wouldn't recommend it, particularly when the market appears to be peaking.

 I would say it's the exact opposite.  When you leverage your own home to the max, you are putting it at risk because you are responsible for the source of the payment money.  The higher the debt service, the higher the demand for an outside source (income) to cover it.

When you leverage your rental to the max, and it cash flows positive (that's critical), the source of funds to make these payments is the tenant.