Can You Use a Veterans Affairs (VA) Loan to Buy a Multifamily Home?

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Veterans Affairs (VA) loans were designed to open a pathway for eligible veterans, active-duty military, and surviving spouses to become homeowners. Generally, these loans are not meant to help you build your investment property portfolio.  

However, depending on the circumstances, a VA loan might be able to help some eligible veterans purchase a multifamily home. This may allow some veterans to finance their primary home and some rental properties in one fell swoop. But, of course, there are specific requirements to learn about before pursuing this strategy.  

In this article, we will explain how VA home loans can be used for multifamily homes, rules around this type of purchase, and how to start an application for your VA loan.

Can VA Loans Be Used for Multifamily Homes?

Yes, eligible veterans can use a VA loan to purchase certain multifamily homes, as along as: 

• The home has no more than four residential units 

• The borrower plans to live in one of the units as their primary residence 

Even though you might rent out the other units, the VA may still accept the home as an owner-occupied property if you do plan to live there primarily. For some veterans, this could be an opportunity, assuming it aligns with your individual financial circumstances. You could theoretically own a place to call home while offsetting some of the costs with rental income.  

That said, because the VA is focused on helping veterans secure stable, safe housing first and foremost, there are some extra requirements when using a VA loan to buy a multifamily home.

What’s the Maximum Number of Units?

We mentioned this above, but to be clear, the property can have up to four residential units, with one of those being the borrower’s primary residence. These homes are often called 2-4 unit properties, or: 

• Duplex (2 units) 

• Triplex (3 units) 

• Four-plex (4 units) 

Anything above four units would fall outside the scope of what a VA home loan is designed to support. Further, it’s not unlikely that the more units (up to four) in the home you purchase, the more documentation may be needed to ensure, among other things, that the units are safe and livable.

Occupancy and Rental Rules

As noted already, the VA requires that you intend to live in one of the units of the multi-unit property you are purchasing. Generally, you must verify that you intend to occupy the property within a reasonable time after closing unless you have an acceptable reason to delay your move-in. You can discuss what that would look like with your lender. 

However, outside of the unit you live in, you would typically be allowed to rent out the other residential units. But note that lenders may want to see verification of your experience as a property manager and landlord, or documentation of a property manager you intend to contract with. We’ll explain this further in the next section.

Using Rental Income to Qualify

If you intend to use rental income or projected rental income to qualify for a VA loan for a multifamily home, you should be aware of some additional things that lenders look for. That could include: 

• Cash reserves equaling at least 6 months of mortgage payments 

• Documented proof of your experience managing rentals or in property maintenance 

The proof of experience would help your lender determine whether you have reasonable odds for success as a landlord. Then, when a lender assesses potential rental income, they will consider an effective income of 75% of the verified prior rent collected on the existing units, or of the appraiser’s opinion of fair monthly rent.

VA Appraisal for Multifamily

The VA appraisal process for multifamily homes is not dramatically different from the single unit process. Basically, an independent appraiser will assess the property for fair market value and determine whether it meets the VA’s Minimum Property Requirements (MPRs).  

However, for 2-4 unit homes, the appraiser has to do that review for each unit to ensure they are all safe to occupy, have working systems, and meet basic habitability standards. Further, since a buyer would likely plan to rent out the extra units, the appraiser would have to conduct a rental analysis to determine what the units could reasonably rent for.

Steps to Apply

If you decide a multifamily home might be the right fit for your goals, the application process typically follows the same general path as a standard VA home loan, with a few added considerations because multiple units are involved. Here’s what you can expect: 

1. Confirm your VA eligibility. You’ll need a Certificate of Eligibility (COE) to show you qualify for a VA home loan. If you’re eligible, your lender can help you get this document. 
2. Share your goals with your loan officer. When discussing your application, let them know you’re considering a 2–4 unit property. This helps them walk you through any additional documentation that may come with purchasing a multifamily home. 
3. Complete a pre-approval. A pre-approval may give you a clearer understanding of your budget. 
4. Begin your home search with the rules in mind. Look for properties with four or fewer units and keep the VA’s occupancy requirement in mind. 
5. Submit a full loan application once you’ve selected a property. At this stage, you may be asked for additional information, including expected rental income documentation or details about each unit. 
6. Wait for the VA appraisal and underwriting review. The appraisal will confirm the property’s value and ensure all units meet the VA’s Minimum Property Requirements. Underwriting will review your full file to determine whether the loan meets VA and lender guidelines. 
7. Prepare for closing and move-in. As with any VA loan, you’ll need to plan to occupy your unit as your primary residence. Once the loan closes, you can move in and begin managing the other units according to your plans.

FAQs

Can I buy a multifamily home with a VA loan with no down payment?

Many are aware that eligible borrowers can often get a VA loan with no down payment. But this ultimately depends on your individual eligibility, loan entitlement, and lender requirements. A multifamily home doesn’t necessary change the VA’s down payment rules, but your lender will consider your specific circumstances in that decision.  

Do I have to live in the property?

Yes. The VA requires you to use the home as your primary residence. You can rent out the other units as long as you actually live in one of them.  

Can rental income help me qualify?

Sometimes. Rental income from the additional units may be considered, but only if it meets VA and lender standards.  

Is the VA appraisal harder for multifamily homes? 

Not necessarily, but there is generally more for the appraiser to review. Each unit has to meet VA MPRs, and the appraiser will also likely need to complete a rental analysis, in addition to determining the fair market value of the home.

Final Thoughts

Not every VA borrower will want to use their VA loan for a multifamily home. But if you want a primary residence that also has the potential for additional rental units, it may make sense to consider that option. Although the guidelines may feel complex at first, you can work with your lender to break them into steps for a more manageable process.  

As with any VA loan, every situation is unique. Exploring your eligibility, reviewing the property requirements, and knowing what to expect ahead of time can help you decide whether a multifamily home aligns with your goals.