Airbnbs are a popular way to earn passive income — and they can be quite lucrative when done right.
But using a VA loan to finance an Airbnb can be complicated. Not only are there strict property requirements the home must meet, but you also must meet certain occupancy rules before renting it out.
Here’s what to know if you’re looking to use your VA loan entitlement to buy an Airbnb property.
Key points:
- You can’t use a VA loan to outright purchase a rental property.
- If you live in a property long enough, though, you can rent it out eventually.
- You can also purchase a multi-unit home, live in one unit, and rent the others out for cash.
- Always read your mortgage contract before renting out your home, and talk to your lender to confirm you’re in compliance.
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Occupancy Requirements
VA loans are, at their heart, intended for helping military servicemembers and veterans find safe, affordable housing. For this reason, they have strict occupancy requirements.
In fact, you must move into a home purchased with a VA loan within 60 days of closing and after that, live there for at least 12 months as your primary residence. Only after you complete those requirements can you turn the full home into an Airbnb or other type of rental and move elsewhere.
Renting a Room, Private Suite, or Entire Unit
If you’re wanting to rent out your full home on Airbnb, you must wait the full 12 months before you can move out and start renting the property.
However, if you’re just looking to rent out a single room or an extra unit (in a duplex or three-unit property, for instance), you can rent those out at any time — as long as you’re still using the property as your primary residence.
What About a Multi-Unit Home?
You can buy properties with multiple units using VA loans. In fact, properties of up to four units are eligible, so presumably, you could rent up to three units on Airbnb, while still living in the remaining one. This may even help you cover the costs of your VA mortgage payment.
Just keep in mind that it means sharing your space with strangers often, which could be problematic — for your lifestyle and your property.
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Renting Your Home While on Deployment
If you’re on deployment, there are exceptions to the above rules. You can, in fact, rent out your home on Airbnb for as long as you’re officially deployed.
You’ll need to make sure someone is there to manage the bookings and property while you’re away, though. This includes cleaning the home, doing regular maintenance, paying the mortgage and bills, etc.
Impact of VA Entitlement
You use a large part of your VA entitlement to buy any home, so it could be challenging to buy another property if you eventually rent yours out. In this case, you would either be working with a much smaller loan amount, or you’d need to come up with a down payment for the new property.
If you want to fully replenish your VA entitlement, you’d need to either pay off the first home or sell it.
Should I Inform my VA Mortgage Company?
You should definitely check your mortgage contract to make sure renting out your property is not a violation of any terms. While it’s not required to notify your lender in most cases, it might be wise to call them just to confirm. You don’t want to be held liable for violating the terms of your mortgage since that can have serious consequences.
Rental Income from Your Airbnb
While your Airbnb will likely net you some profits once it gets up and running, you probably won’t be able to use that future income to qualify for your initial VA loan, so make sure you have the cash to back up your home purchase from the start.
You should also consider the costs of operating a short-term rental. There are taxes, insurance implications, cleaning and supply expenses, and the costs of marketing the business, among other fees. These should all factor in before you decide to start Airbnbing your property.
More Reading
VA Loan vs. Conventional Loan – Know the Difference Before You Buy
VA Loan Inspection Requirements & Appraisal Checklist
VA Loan Eligibility Requirements
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