Buying a multi family home that already has renters in one unit. How does this impact loan amount and interest rate?

2016-07-05T10:01:06-04:00

I'm looking at buying a classic two flat home. I would live on he first floor and basement levels, and would rent out the second floor to a tenant. There is actually already a tenant on the second floor paying $2K/mo in rent. My questions are: 1) how does having a paying tenant impact the interest rate of a VA loan? 2) how does this impact the amount you can borrow with a VA loan? Thanks for feedback from anyone here on RP.

Response by 1LT William Clardy made Jul 5 at 2016 11:29 AM

2016-07-05T11:29:20-04:00

Out of curiosity, what are the benefits you see from using a VA loan to finance the purchase, as opposed to obtaining a standard, fixed-rate mortgage?

Response by SPC Anthony C made Jan 22 at 2020 10:54 PM

2020-01-22T22:54:47-05:00

Hi CPT Aaron,
I bought a triplex in Santa Barbara county using the VA home loan about two years ago. There was no impact to me on the interest rate of my loan. I am now working placing this property on a conventional loan, and moving my VA loan to a second property. Unfortunatelly, the VA does not count the income from multiple units towards your qualification income unless you have one or more years experience managing a multi unit property. This was the case in 2019, so the rules in 2020 could have changed. If you have the rental experience, your total loan qualification will increase dramatically if you include the rents from the new property as well.
I just noticed you asked this question in 2016, hopefully this answer is helpful to another veteran.