How Zoning Impacts VA Loan Eligibility
Just because you want a VA home loan doesn't mean that you're necessarily buying a traditional home. Whether it's a condominium, a multiplex, or something else, multi-use buildings are very common in urban settings. You might even buy a property just to rent it out, and the question becomes: does the VA give loans for these types of properties? We have the answer for you below.
The first hurdle you need to pass is simply getting approved for the VA loan. You can discuss particulars with the lender and your contacts in the VA, but approval is the first step regardless of what type of property you'd like to buy. Remember that it is possible to be pre-approved for a VA loan before you choose a property. This will work in your favor since you can house hunt knowing exactly what you're capable of spending. This is also the ideal time to work out the pros and cons to purchasing non-traditional housing.
When you've passed the most difficult phase of the process, then you can examine the requirements the VA has lain out to allow borrowers to purchase multi-use properties. The VA Lender's Handbook, which is available online, states in chapter 11, topic ten that, "For VA Loan Guaranty purposes, the remaining economic life of the security must be at least as long as the loan repayment term, typically 30 years. A remaining economic life estimate of less than 30 years must be adequately explained and not arbitrarily established. This is to avoid depriving veterans of the home of their choice in an area where they can afford to live." This means that as long as the appraiser determines that the building will be salable for at least thirty years, the VA will allow the purchase. The only other aspect to consider is that the property must be your primary residence.
One important consideration to make, in the name of wise housing purchase, is the viability of your multi-use property. While the living arrangements might be considered viable by the VA for three decades, the commercial portion of it might not be so stable. It's fully possible that the commercial space may become less marketable over time or flat out unsalable. If you are yourself operating a small business or offering a service out of the building, you have to consider what may happen down the road. If you don't plan on ever selling the property, then this isn't as big a consideration, but if you think it's possible you may have to sell, understanding what the business portion of the building will do over the course of a few decades is crucial.