You can actually own two homes, concurrently, that were purchased with VA Loans. The verbiage of the VA Loan says that you have to pay off a home in order to purchase another. However, it is not really clear that you can use up to your full VA Loan limit, even if it is across two separate homes. For example, the current VA Loan limit is $510,400, therefore you can buy a home for $200,000 and another for $300,000. However, before you get too excited, remember the VA Loan is only for homes that you will occupy. There is no real limit to how long you have to stay in a home before you intend to buy another. I personally would say 2-3 years.
If you intend to buy a second home that costs more than your remaining VA Loan, you can. However, the VA will cover up to its limit, but you will have to pay a reminder of the down payment. I do not know the exact percentage, but it goes something like this: Let’s say you have $200,000 remaining on your VA Loan and want to buy a home for $250,000. Of that $50,000 remaining, you would have to pay a percentage down, say 20%. So you would need to come out of pocket $10,000. That is a steal for a $250,000 home. Remember most civilians would have to put 20% of $250,000 down on the home. That would be $50,000. The VA Loan is truly a wealth-building tool.
This strategy would not work in the high cost of living areas such as Southern California or New York. Places Like Pensacola, Fl, Beaufort, SC, and Yuma, AZ would be ideal to buy multiple homes. Here is how I ended up with 3 homes during my career.
House #1– We built-in 2008 in Yuma, Az for $300,000. The VA did not cover construction loans back then. We put $60,000 down on the home and preceded to lose all of that money because it was 2008. We are slowly building our equity back up.
House #2– We bought in 2017 in Pensacola, Fl for $180,000. We used the VA loan so no money down. We came out of pocket $5,000 for closing costs. The house is now worth roughly $240,000. The rental income is great. I cannot complain. Starter homes make the best rental homes, in my opinion.
House #3– We bought in 2020 in Pensacola, Fl for $340,000. We used the VA Loan. However, we were over our VA Loan limit (I think based on 2017 rates at $484,350) by $35,000. We had to pay a total of $6,000 down plus closing costs. However, that is a lot better than $70,000. I still think it was a deal of a lifetime.
With this information, try to be very strategic with your home purchases. I know that home-buying can become very emotional, however, it is worth it to own multiple homes. It is a solid wealth and income-generating tool. Use it wisely to build your wealth!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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