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VA Loans and Rental Income
A reader asks, “Can the rental income from a multi unit property be used at least partially to qualify for the loan? I know in the past that it could as long as the veteran had six months of cash reserve on hand to cover rental vacancies.”
This question comes up frequently; some borrowers want to know if a VA home loan can be used to purchase a multi-unit property (yes) and also want to know if rental income from said property can be used to qualify for the VA mortgage loan (it depends).
Borrowers cannot automatically use projected rental income to qualify for a VA home loan. Can existing rental income be considered “likely to continue”? With proper documentation, yes. Can future income from rentals in the multi-unit property be used to calculate the borrower’s verifiable income? It depends.
The VA does make provisions for projected rental income to be counted in some cases. According to the VA Lender’s Handbook, Chapter 4 under the Income section, you’ll find the following which addresses the rules for rental income from the multi-unit property which is “Securing the VA Loan”–the lender is required to verify:
• cash reserves totaling at least 6 months ... more

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