Fortunately for me, I had recently been faced with a similar situation and knew exactly how to document the file. So now you are probably wondering where the conundrum is…..right? Well, anytime I am faced with a somewhat peculiar loan scenario I like to double check my handbooks to make sure that my killer loan officer instincts are correct. I emailed my number one investor and lo and behold, I got shot down! Even though I had just read in the VA handbook that it was allowable, here my Account Executive is telling me it isn’t. To make a long story short I found out that it was simply an investor overlay (I’ll get to those in a future post). After a few more emails I finally found a couple of investors that will buy the loan.

Here’s the skinny: If you are a veteran and you are going to keep your current residence while purchasing a new home you are allowed to use the anticipated rent to offset the mortgage payment on the home you are vacating.  The rent cannot be used as effective income so only an amount equal to the vacating mortgage payment can be used. Some investors will require 3 months reserves on both the current residence and the new home. Obviously, if the home you are vacating is currently held by a VA mortgage you will have to pay it off or refinance it with a different loan type as the VA doesn’t allow multiple open loans on one certificate of eligibility. To properly document the file the buyer will need to provide an executed copy of the lease agreement.

If you have any questions regarding VA loans please contact us.