First time buyer, using VA Loan

[Rachael Lyn]

Buying my first house in San Antonio, TX using my first VA loan. Looking for any tips, specifically about buying a new home with incentives vs. buying a much cheaper property that will need cosmetic updates.

[Erik Browning]

Quote from @Rachael Lyn:

Buying my first house in San Antonio, TX using my first VA loan. Looking for any tips, specifically about buying a new home with incentives vs. buying a much cheaper property that will need cosmetic updates.

Congrats on starting. It's good you are asking on here how to best utilize your VA entitlement. If you're not sure what entitlement is, it's the purchasing power the VA allows you to use up to a point in which they will "guarantee" your loan.

I am a veteran, an investor, I’ve used my VA loan (including VA renovation loan) multiple times, and quit my old job to become a lender that specializes in getting other active duty and Veteran folks into VA homes while maximizing there entitlement benefit.

The location on this post says San Antonio, Texas, which is a prime spot for the method that I’m going to suggest you use due to its affordability. But first, keep in mind that entitlement thing that I was speaking about.

In Bexar County, you can buy a primary residence using your VA loan up to the county loan limit, which is $726,200 (2023 county loan limit figure). That figure would use up 100% of your VA entitlement. If you divide by two, that would use up 50% of your entitlement or a $363,100 home purchase. In this example, you could buy one house/multifamily for $363,100 (50% of your entitlement), live in it for at least a year depart that home and rent it out, and then purchase another home using the remaining entitlement (other 50%) of $363,100. this would use up 100% of entitlement and you can have two VA loans at the same time.

Now, this might get confusing, but please stay with me. Let’s go back to that county loan, limit figure of $726,200. If you wanted to, you could actually purchase a $1 million property in San Antonio (beyond that $726,200 figure), and the VA would still guarantee that loan. The problem is that you don’t have any entitlement left over after that first big purchase unless you did something called a “1-Time Restoration” of your entitlement.

As it sounds, the “1-Time Restoration” restores your entitlement so that you could use it again (if you want to keep that million dollar property as a rental or the other two small VA loans that you have). If you do the 1-Time Restoration after you've purchased the other properties, you can repeat the process. But keep in mind the "1-Time" part of this deal lol. You can only do this one time - ever. And once you use up all of your entitlement during each leg of the process, you don't get to use it again.... UNLESS you sell all of your properties that you acquired with your VA loan.

So that's a starting point. It's good to have a long term vision with your entitlement if you plan on having the VA loan as a tool in your toolbelt. VA loans allow you to invest with guardrails and see if it's even right for you. You might become a landlord and hate it, but if you don't, the VA loan is a great way to utilize your benefit and practice the fundamentals of investing before you graduate to other methods of financing.