VA loan or not? Pros and cons?

[Steven Macdonald]

I am currently looking into buying my next property with my VA loan. I plan on house hacking a multi with that loan? Then moving out and renting it a year after I fix it up. Am I able to move out and rent my property after a year? Or do I have to refi out of the VA loan to use that property as a rental? Since it is not my primary residence? I don't want to do a complete refi into a conventional a year later and restart the whole process because the VA loan doesn't allow me to use it as a rental? Any thoughts? Thank you

[Zack Karp]

@Steven Macdonald frankly, it sounds like you are talking to the wrong lender(s).  Let me categorically address everything I see here in this thread.

1. When you buy any primary residence, whether it's VA, FHA, Conventional, or USDA, you are signing a Mortgage at closing that says that you will occupy the property for 1 year. After that, you can do whatever you want. You can rent it out and you do NOT have to refinance in order to do that.

2. You CAN have multiple VA loans at a time. This is called using Bonus Entitlement. It depends on the location of the property that you are purchasing, your existing entitlement, and the availability of additional entitlement. If your LO doesn't understand this, or cannot communicate this clearly after hearing your scenario...RUN.

3. You CAN purchase a 2-4 unit property using VA financing with 0% down, and possibly without having to refinance out of your existing VA loan. See #2 above.

4. If you want/need to be able to use your entire VA entitlement, because the new property purchase price and/or loan amount is too high causing too large a down payment using your bonus entitlement, that's when you will need to refinance your existing VA loan into a Conventional loan, so that your entitlement can be restored.

5. The VA loan has a funding fee, unless you are disabled. It gets rolled into the loan, not out of pocket unless you want to. There is no monthly PMI. And the rates are lower than Conventional. This makes the VA loan the most powerful loan out there, 99% of the time the VA loan should be chosen over Conventional or FHA. It is a huge benefit and should be used as such. If your LO is telling you their VA rate is higher than Conventional...RUN.

6. If you are not disabled, your subsequent funding fee is higher than the initial purchase funding fee.  But at the end of the day, who cares?  It's financed into the loan.  If this is a long term buy and hold property, that fee is negligible compared to the profits you will make from rental income and tenants paying your mortgage.

7. You can do a VA IRRRL (streamline refi) on a primary or investment property with an existing VA loan. If your LO is telling you that you cannot do an IRRRL on an investment property...RUN.

I think you catch the drift. There are too many lenders and LO's who are simply call centers and order takers. Your LO may have been working at Jiffy Lube 6 months ago. Make sure you are working with a rockstar who knows VA lending and investors. And I love BP, but sometimes you get wrong/bad advice from non-lenders (or even from lenders smh) because it's an open forum and anyone can say anything and people believe it. I am a Military Mortgage BootCamp Instructor. I teach VA lending.  There is a big difference between someone like me and the call center LO at Veterans United or USAA or Navy Fed.  VU is a scam and has no affiliation to the VA whatsoever.  Navy Fed and USAA are fantastic at banking and insurance, but frankly they suck at mortgages.  Just being real.  Be sure to align yourself with the right team...LO, Realtor, CPA, Attorney, etc...it can make a huge impact on your success or failure.

Hope that helps!  TYFYS and best of luck.