VA Loan – How can I maintain eligibility and still make money?

It is possible to maintain VA loan eligbility and still make money.

The following is the process that Raúl has offered:

Raúl will enter into a leasing agreement for 3 months to 2 years, depending on when the seller wants to apply for their VA benefits again. During this time, Raul’s payments as the buyer will count towards the purchase of the home. This arrangement will not affect the seller's DTI or VA loan eligibility in regards to the property, as we will show that the property has been rented out.

If the deal is netting a monthly profit for the seller, after 2 years, the seller can show the income to the VA loan officer, further decreasing their DTI. Raúl can then transfer the deed to his name with a similar process as above.

VA loan eligibility is reserved because the property has been shown to be rented.

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MYTH: Sellers need to pay off the existing loan to be fully eligible for their benefits.

FACT: Sellers do not need to pay off their existing loan to be fully eligible for their benefits. They can only have a certain number of VA loans open at a time, and they have a pre-determined limit that they can borrow (entitlement) determined by the location of the property that holds the VA lien. The way to calculate the borrowing limit is as follows: Borrow amount = (county VA loan limit) – (existing VA loan balance).

Sources:

https://www.frommilitarytomillionaire.com/va-loan-limits-by-county/

https://www.biggerpockets.com/blog/va-home-loan

MYTH: Having a loan in their name will affect the buyer's DTI.

FACT: As long as the seller can show a lease agreement, the buyer's DTI will not be affected. Not all lenders calculate DTI the same way, so if a lender does not accept a lease agreement as a way to lower DTI, the buyer can find another lender that will.

MYTH: VA loans are only assumable by other veterans.

FACT: Raúl is not assuming the loan. The loan stays on the seller’s name until the agreed allotted time.