Sound to good to be true? This can be done by a Veteran, active service member, or qualified surviving widow of a service member purchasing a new home with a VA home loan! These days if someone wants to rent out their current home and then purchase a new primary residence, most programs require either 2 years of tax returns proving the rent or requiring an appraisal to prove 30% equity in the home and a copy of signed one year lease with first month rent paid.
Well with a VA guaranteed home loan, a buyer may rent out their current house prior to closing, use up to 100% of the rent amount to help offset the current mortgage payment, and then use VA to purchase the new home with no money down.
Here are the general guidelines for a VA purchase and leasing current home:
- Current mortgage can be any type including VA (read this blog on using bonus /2nd tier entitlement)
- The current home must be converted to a rental during the purchase process of the new home or must have 2 years tax returns. So if someone started renting out the house 6 months ago, they must wait for 2 years of reporting the income on the tax returns
- 100% of the gross rent may be used to offset the current mortgage payment including principal, interest, taxes, insurance, PMI, and HOA dues up to the total payment
- If the rent is more than the total current monthly housing expense, the extra profit cannot be used as income for the new mortgage. But if there is a loss, that is subtracted from the qualifying income
- Requires a signed lease agreement on the current residence for 12 months to count the income and may require proof of the security deposit or first month’s rent
- No appraisal of the current home is required to count the rental income
- All other normal VA guidelines apply
Team Move lends in areas such as Wilmington, Leland, Hampstead, Jacksonville, Camp Lejeune, Whiteville, Shallotte, Southport, Elizabethtown, Lumberton, Fort Bragg, Pope Air Force Base, Fayetteville, Rockingham, Raleigh, Garner, Smithfield, Clayton, Goldsboro, Charlotte, Greensboro, Winston-Salem, Durham, Chapel Hill, Burgaw, Castle Hayne, Holden Beach, Supply, Ocean Isle Beach, Sunset Beach, Hubert, Tabor City, Carolina Beach, Kure Beach, Laurinburg, Topsail Beach, North Topsail Beach, Surf City, Sneads Ferry, Richlands, Wrightsville Beach, New Bern, Oak Island, Saint James, Wallace, Sanford, Pittsboro, Apex, Cary, Raleigh, Holly Springs, Fuquay Varina, Siler City, Southern Pines, Aberdeen, Pinehurst, Whispering Pines, Vass, Spring Lake, Fayetteville, Lillington, Hope Mills, Dunn, Angier, Smithfield, as well as the rest of NC. North Myrtle Beach, Myrtle Beach, Conway, Loris, Little River, Longs, as well as the rest of South Carolina and Virginia.