All Forum Posts by: Zack Karp

 @Anthony Parsons it depends on what type of loan you will be getting, as Fannie Mae, Freddie Mac, FHA, and VA all treat the heloc differently. And also the rental income from your departing property, if needed to qualify.

For example, if you were buying FHA, and you need to use rental income from your departing property to qualify, getting a heloc over 75% LTV would shoot you in the foot because you will need an appraisal to prove you have 25% equity in your departing property in order to use rental income to offset the payment. VA does not have that requirement.

But to answer your question on the actual heloc payment, and how it affects you, VA will allow you to just use the actual monthly payment on the amount actually drawn on the heloc, not based on the full line amount. And with VA, unlike Conventional and FHA, there is no hard stop max DTI, rather it's based on your residual income. However, some lenders have overlays, which are more strict qualification requirements over what the VA requires. For example, we don't have any overlays, we underwrite directly to the VA guidelines. So it's best to check with your lender on all that, and make sure they don't have any overlays, and no surprises, before you get the heloc.

TYFYS and best of luck!

 @Anthony Parsons at those price points, yes you should be able to use secondary/bonus entitlement for another VA purchase. You or your loan officer would need to check your COE from the VA to see what entitlement was charged on your current home, and see what your eligibility is for the next home. You can easily figure this out so you can plan ahead. If anything, maybe you won't qualify at 0 down, but maybe a very small down payment needed where it makes sense to use VA again. And then you don't need to refi and lose that awesome rate, you will likely never see rates that low again.

TYFYS and best of luck!

@Sean MIddleton that is absolutely false.  You can use rental income.

If you are talking about the rental income from a property you are purchasing, you will be able to use the lower of the actual rent or the market rent on the appraisal.

If you are talking about the rental income from properties you already own, you can use leases if they were recently acquired, otherwise if they have been reported on your tax return Schedule E, it will be calculated off that.

This is not an Indiana thing.  Sounds like either the LO you are working with doesn't know what they are doing, or that lender has overlays on top of the actual guidelines.  Run...

If you want to discuss your situation further in more detail, feel free to reach out.

Best of luck!

@Ryan Ribinskas I would sell the house now and avoid paying capital gains tax, since you have lived there 2 out of the past 5 years. By selling, it will restore your VA entitlement to buy another home with zero down, as you mentioned. The right lender will be able to let you sell and purchase same day and restore that entitlement for you. With the proceeds from the sale, you can use that for rehab on the new home, and/or as a down payment for an investment property.

TYFYS and best of luck!

@John Warren thanks for the tag!

@Steven Caldwell feel free to reach out if you want to discuss any strategy

@Jake Fugman thanks for the tag!

@Carli Schlaker mapping out a strategy and getting preapproved is your first step. As Jake mentioned, there are a lot of nuances with the guidelines for FHA and Conventional loans that are important for house hackers and investors, that most loan officers don't take the time to educate you about. The goal is to make sure that you don't buy the wrong property and get stuck, which unfortunately is what happens with a lot of new investors when they don't have the right realtor and loan officer on their team. Just buying a multifamily property is not the same as building a real estate portfolio, and the exit strategy of each step and looking a couple moves ahead is critically important to your long term success. Feel free to reach out if you want to connect.

Best of luck!

@Jonathan Klemm thanks for the tags!  @Moises Correa and I already got the ball rolling :)

@Account Closed

First off, there is no difference in underwriting time between a VA, FHA, or Conventional loan, or a SFD vs a 2-4 unit. As long as the LO/lender knows what they are doing.

Ok time for some next level stuff...

Strategically, if you are looking to house hack several properties, there ABSOLUTELY is an order in which you should utilize your financing, so that you don't get stuck. The reason is due to each of the different lending guidelines for Conventional, FHA, and VA, and how you need to qualify for each subsequent property.

You should use FHA first. The reason is that when qualifying for a future property with FHA, in order to use rental income to qualify from the vacating property, there are guidelines.  First, to use income from the unit you are vacating, you would need to relocate 100 miles away.  And to use income from the other units, you would need to pay for a new appraisal on that property to prove that you have 25% equity in the property.  Pretty tough to gain that much equity in 1 year unless you're doing a major rehab.

Then use VA second. Also this helps because in order to use rental income from the other units to qualify for a VA loan, you must have prior landlord experience. So having a property under your belt satisfies this. (There also is a workaround that you can hire a property manager to satisfy the landlord experience).

Then use VA again third. Wait, what? Yes, you will have secondary/bonus entitlement, and be able to use VA again, without having to refinance that last property out of VA. The max amount of this property will depend where you buy, and how much entitlement was charged on the first VA loan.

Now, you will have 3 properties and up to 12 doors under your belt, in a little over 2 years if you house hack each year (you need to occupy the property for 1 year to satisfy the primary residence terms of your Mortgage).  By this time, hopefully you have done well, and you will have a lot more options...

Then for the next property, you can buy a SFD with Conventional with 5% down. Or perhaps one of your first 3 properties did well enough that you have 25% equity in one of them to refinance to Conventional, and free up your FHA or VA eligibility again. Or perhaps now you have saved up enough to put 25% down on an investment 2-4 unit with Conventional financing.

Hope that helps :) You have a very unique opportunity as a Veteran with the VA loan. Mapping out this strategy can be the difference between one-and-done, and a successful run at real estate investing. This is the difference of working with a LO who specializes working with investors and house hackers.

TYFYS and best of luck!

@Jaziel MaldonadoRoman using FHA first is actually a smart move strategically. Check with your TSP administrator to see if you can withdraw the funds (even with penalty), and then deposit some or all of the funds back within 60 days to avoid the penalty. That would be the best move. To your question, if you don't withdraw the funds, then it can be used to satisfy your reserves, if required, but cannot be used for down payment unless liquidated.

Then save VA and Conventional for future properties, there is a very strategic reasoning for the order in which you use your financing, as far as qualifying/guidelines.

TYFYS and best of luck!

@Aubrey Laflamme VA and FHA loans are only for a primary residence. Investment properties would need to be Conventional or some other non-QM loan product. For a 2-4 unit investment property, Conventional requires 25% down. In order to have a low down payment with VA or FHA, it would need to be your primary residence.

Hope that helps.  TYFYS and best of luck!