- As an Air Force veteran, I can get VA loans, which do not require a down payment.
- I used a VA loan twice to buy homes for myself. When I moved, I turned my first home into a rental.
- I hope to use a VA loan one day to purchase a multi-family property that I can live in and rent out.
I’ve spent a lot of time investigating the benefits afforded to service members. As a naturally frugal person, joining the Air Force has unlocked a variety of tools for my financial success. This included a Post-9/11 GI bill, a high-interest savings account, and Health insurance provided by VA. But one of the biggest benefits I experienced was VA loanwhich I have used several times.
Most members of the military have heard of the VA loan. These loans, which are federally insured, will allow eligible service members to put 0% on a home loan without having to pay any of it. Mortgage Insurance installments.
And while the interest rates on these loans tend to be a bit higher than standard mortgages, lower credit score requirements and no down payment required have helped make home ownership more affordable.
You can get more than one VA loan
Probably the best part of VA loan The benefit is that, unlike many benefits afforded to service members, your eligibility does not expire when your services end. This means that veterans can enjoy the same loan options as their active-duty counterparts — and the loan can be used multiple times.
Now, when I say a few times, I don’t mean you can take out a loan, pay it off, and then get another VA loan. There is a common misconception that you can only get one VA loan at a time, but the truth is that you have a set amount of money that you can borrow. If your first home does not exceed this amount? You can get another loan.
This does not mean that you can go out of the house and buy every property you see. Most of the time, you will need a good reason to buy another home.
A lot of this has to do with the fact that any home you buy with a VA loan is meant to be a primary residence. So, if you already have a home, but want another home only 50 miles away, chances are the banks will consider this a vacation property and won’t agree to another loan.
I have used my VA loan maturity twice so far
In my case, I first bought property in August 2017 after accepting a job offer in Washington, DC. After a few years, I went back to school, changed my profession, and decided to go home to California. Because I didn’t use all of my entitlement—and because I was making a big move across the country—I was able to qualify for a second VA loan.
method VA loan maturity A bit tricky, and private government websites aren’t particularly intuitive. But, essentially, eligible service members receive two levels of loan entitlement.
The base level includes $36,000 worth of support from VA. Since the VA only guarantees 25% of your loan at any one time, this essentially gives you $144,000 purchasing power.
However, a second benefit tier is available to members for $125,800 (which means you can borrow up to four times that amount). Add these two together and you get purchasing power of $647,200. (Know that these loan limits only apply when you are looking for a second VA loan. You do not have a loan limit on your first VA loan.)
My first apartment costs $330,000 and the second is $400,000. Since these two loans totaled over $647,200, I had to make a down payment on my second property, but if you’re not using the full maturity, you’ll still only need the 0% deduction.
I applied for my second VA loan and it was approved in June 2019. Fortunately, it’s been over a year since I bought the original property, and I’ve been able to rent it out without being issued.
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I am earning passive income on my first property
Nowadays, I’m back in touch with California (when I’m not traveling, at least). Together, my two VA loans have been a huge boon. Not only am I able to earn additional income on my original residence, skipping in mortgage insurance for my second property saves me hundreds of dollars every month.
Even though I am no longer in the Air Force, I will always be grateful for the opportunities I have. My next goal? Sell my one-unit apartment and settle into a four-unit condo using – you guessed it – My VA loan.