When it comes to purchasing or cashing out on a 1-4 unit property with a VA loan, there are specific guidelines that borrowers need to be aware of.
Here are some key points to keep in mind
- 100% LTV financing is available for both purchases and cash-out refinances on 1-4 unit properties.
- If there are more than one 30-day mortgage late payments in the most recent 12 months, there may be an automatic manual downgrade.
- When using rental income on a 2-4 unit property, borrowers are typically required to have 6 months of PITI reserves.
- Condos must be VA approved only, FHA approval does not suffice.
- Deed-restricted condos are typically limited to residents who are 55 and older.
- Non-occupying co-borrowers are not allowed on VA loans.
- Borrower combinations involving family members other than a spouse or married veteran require prior approval from the VA Regional Center.
- The current seller must have taken title to the property at least 1 day prior to the signed contract.
- A minimum of 2 years of seasoning is required for Chapter 7 bankruptcy and foreclosure.
- Gifts of equity are not permitted on VA loans.
- Sellers are allowed to contribute a maximum of 4% towards the buyer’s closing costs.
- Borrowers with a FICO score as low as 580 may still qualify for a VA loan.
By understanding and adhering to these guidelines, borrowers can navigate the VA loan process with confidence and secure financing for their 1-4 unit property. We urge you to get in touch with one of our VA loan experts who go over your scenario and try to structure your deal to make it work.