VA Loan for 2-4 Unit Properties (Duplex, Triplex, or Fourplex )
Veterans who are looking for an excellent opportunity to purchase an investment property, without it technically being called an investment property, may want to look at options for buying a 2-4 unit home. VA loans are not available to finance an investment property, however, you can earn rental income on separate, detached units.
VA loans can be used for any eligible 1-4 unit property. This includes any 2 unit (duplex), 3 unit (triplex), or 4 unit (fourplex) home, as long as you will occupy one of the units. Technically, if you live in one of the units than it is considered owner occupied and therefore not classified as an investment property.
VA Loan Limits for Multi-Family Homes
The loan limits for VA loans are the same as Fannie Mae conforming loan limits. These are set by the Federal Housing Finance Agency (FHFA). The numbers below represent the standard limit which is applicable in most counties throughout the country. There are 235 counties that have higher loan limits, so be sure to check to see if your county allows a higher loan amount.
- 1 units: $510,400
- 2 units: $653,550
- 3 units: $789,950
- 4 units: $981,700
Would you like to view the conforming loan limits for your county? You can lookup the 2020 conforming loan limits for any location using this conforming loan limits lookup tool.
VA Loan Requirements for Multi-Unit Properties
The requirements for a 2-4 unit properties are generally the same as a single family residence (1 unit home). This includes:
- Certificate of Eligibility – A COE is available for any veteran or active duty military that has served either 180 consecutive days during peacetime, or 90 days during war. Or, any reservists with 6 years or more of service.
- Credit – There is a degree of flexibility, but VA loans generally require a 620 score or higher.
- Income – The income requirements are more related to your debt-to-income ratio (DTI ratio) than they are to your actual income amount. You must be able to show your ability to pay the mortgage payments. This includes not having excessive debt which could impede on your being able to make monthly payments on time. Most VA lenders want to see a 41% DTI or less (once the new mortgage payment is factored in).
These are some of the basic requirements to get a VA loan for a 2-4 unit property. Would you like to see if you qualify for a VA loan for a multi-unit property? We can help match you with a mortgage lender that offers VA loans in your location.
Advantages of VA Loans for Multi-Unit Properties
VA loans offer terms that are unheard of these days to all other types of borrowers. This is the case for any home purchase, but especially for a multi-unit home which could potentially be used as an (unofficial) investment property and earn rental income. What are these benefits?:
- 100% Financing – If you qualify, you may be able to purchase a 2-4 unit property without having to place any down payment at all.
- No PMI – VA loans do not require private mortgage insurance to be paid regardless of the LTV.
- Low Rates – VA loans often have significantly lower rates than FHA and conventional loans.
How does a VA multifamily home loan match up against a FHA or conventional multifamily mortgage? If you were to compare the best possible loan terms (from any lender) for a FHA loan or conventional mortgage, it would be clearly evident how much better the VA loan terms are. An FHA loan would require at least a 3.5% down payment (which is still pretty good), but would require both upfront and monthly mortgage insurance payments. A conventional mortgage would require 15% down on a duplex and 25% down on a triplex or fourplex, and for the duplex you would have to pay PMI (on any loan over a 80% LTV). If you meet the requirements, a VA loan is surely going to provide the best loan.
Frequently Asked Questions:
Below are some of the most frequently asked questions and answers about VA loans for 2-4 unit properties:
Can I buy a property that has more than 4 units?
VA loans are strictly available for 1-4 units. Any property that has 5 or more units is considered commercial and would require a different type of loan and mortgage lender.
Are VA multifamily loans available for new construction?
Yes, VA loans can be used for new construction of 1-4 unit homes.
Can rental income count as qualifying income to help DTI ratios?
Yes, the rental income from tenants in the other unit or units can count as income, potentially helping your DTI ratios which are part of the loan qualification considerations.
Can a first time home buyer apply for a multi-family home loan?
Yes, first time home buyers are treated the same whether they want to buy a 1 unit, 2 unit, 3 unit, or 4 unit home. The only difference being you can qualify for a higher loan limit (as already mentioned on this page) for multi-unit properties.
I’ve already purchased a home in the past using a VA loan, which this disqualify me?
Absolute not. VA loans are reusable. You can be a second time home buyer, or even have already owned homes several times in the past. You must use the home as your primary residence though. There are no VA loans for what are considered an actual investment property.
I want to buy a multi-family property and use part of it for my business, what should I know?
VA loans allow up to 25% of the floor space to be used for a business. It can not exceed this amount though, or otherwise it will not be eligible.
Can I have a cosigner / co-borrower apply for a VA loan with me?
Yes, you can have a cosigner, but depending on your relation to them, it will be handled differently. It is best if it is a spouse, or another military member or veteran. If it is a non-spouse, non-military co-borrower, that can be complicated, but is certainly feasible to get an approval.