Military Veterans Investors using VA loans

[Alexander Kim]

Hello. I am a newbie investor and I was debating on using my VA loan for my first investment property. Is there anyone on here at bigger pockets that are veterans that has some experience in using their VA loan for investment properties. I know there are so many advantages with the VA loan, I would just like to hear some success stories or any type of experiences good or bad with using the VA loan.

[Ronald Allen Barney]

For the initial purchase VA will only guarantee a loan for a veteran's primary residence. While that primary residence can be assigned to an LLC as you move out (in order to rent it), under VA rules you remain personally liable for the payback of the loan (not the LLC). Also lenders often have a due-on-sale clause with VA loans that if you transfer or assign the property the entire mortgage becomes due, so that puts you at risk of needing to scramble to get new funding to keep the deal.

So even though it technically "could be done" it would be much lower risk if you can get in either as a first-time home buyer at 3%, use FHA at 3.5%, or a conventional primary residence loan at 5% down, and then assign it to your investment LLC a year later as you move out. Fewer pitfalls going those routes.