BRRRing on a VA Loan

[Stephanie Caruthers]

Hello, i have never bought a home but i have been looking in Raeford, NC. I was stationed there when i was in the army and now I want to buy my first rental property there within the next 60 days preferrably two within the same neighborhood. I currently live in Washington due to my husband being stationed here, but will be getting out in July of next year. We are applying for a loan and have a question.. 

Is it possible to use the VA Loan, say we will be living in it but we can't because we live in WA, do $0 down, use our money to BRRR and then refinance with another loan company so that the VA is paid off and we no longer need to live in the house? Or is there is also a period of time where you also can't refinance either? Has anyone done this before?

[Jeff Shumway]

Hey Stephanie, congrats on taking the first step toward getting your first investment property. I would strongly advise against saying you are going to live in the property with your VA when you actually have no intention of living there. A lot of newer investors don't realize this actually constitutes mortgage fraud which is a felony.

When you are moving to a new primary residence, the lender will also do all sorts of employment checks where they use a 3rd party company to contact your employer to verify you are either able to work remote or will be physically working in that location. 

The VA home loan is an amazing product- I'm a veteran myself and own my own home on a VA loan. If you're looking to use it to start building wealth, I would suggest either house hacking or purchasing a home and living in it while your force appreciation. (Or better yet, find a value add multi-unit property and force appreciation!) The VA loan has some really cool benefits when it comes to refinancing- you can go all the way up to 100% loan to value on the cash out refinance. Most loan products only allow you to go up to 80% loan to value. Meaning, on a VA cash out refinance you can take out 100% of the value of the property whereas on a conventional loan you could only take out a loan for 80% of the value of the property. The VA loan allows you to access a full 20% more of your equity. If you decide you don't want to take cash out and rates continue to stay low, you can always utilize the VA Interest Rate Reduction Refinance Loan (IRRRL). It's a streamline refinance that does not require an appraisal and you can usually wrap all the closing costs into the loan. It also requires you to reduce the interest rate by at least .5%.

Feel free to reach out if you have any questions on using your VA loan. I'm happy to discuss.