We work with veterans and active-duty service members every day to help them achieve the dream of homeownership. VA loans offer incredible benefits, but there are specific rules you need to know, especially if you’re planning to use rental income to qualify.
PITI Reserve Requirements for Rental Income
When a VA borrower is purchasing a 2–4 unit property and plans to use rental income from the other units to qualify, the VA requires 6 months of PITI reserves.
- PITI = Principal, Interest, Taxes, and Insurance
- Without these reserves, the rental income cannot be used for qualification.
If the borrower wants to use rental income from an investment property they already own, the VA requires 3 months of PITI reserves for that property, or again, the rental income won’t count.
Gift of Equity Not Allowed
Another important rule: VA does not allow Gift of Equity transactions. This means the purchase price cannot be reduced through a credit from the seller in lieu of a cash payment. Borrowers must meet VA’s requirements without this type of assistance.
Our VA loan specialists guide you through the process so you’re always a step ahead. We’ll help you calculate reserves, structure your loan, and ensure your financing meets VA’s guidelines from day one.
Connect with us, and we’ll have one of our VA loan specialists guide you in the right direction.