VA Loan Info About Multi-Family Units

What’s interesting about VA loans, is that they can’t just be used for single-family units (a house, a condo, manufactured home, etc.) They can also be used for what are called ‘Multi-Family Units’. Multi-family units are things like duplexes and quad-plexes. The maximum number of units a residence can have and still be able to be purchased with a VA loan is four. It’s important to remember, however, that the VA loan occupancy requirements are the same for multi-family units as they are for single-family ones; the VA-eligible borrower must certify that they intend to live in one of the units as their primary residence. This requirement is to make sure that the VA loan benefit is being used for what it was intended for: to provide veterans with suitable housing on better terms than they could otherwise g get.

The VA will even allow the purchase of a mixed use space, with some of the space being dedicated to commercial use. The VA requires that no more than 25% of the floor space can be dedicated to commercial use, but for many situations, that is very appropriate and gives the veteran much more flexibility in choosing their new home. However, as with anything done outside the norm, there are extra considerations and requirements that are associated with choosing to use VA loan benefits for a multi-unit or multi-use home. The main differences rear their head when it comes to the VA minimum property requirements (MPRs). There is obviously a difference in living conditions from a multi-family unit and a single-family unit, and the differences in the VA MPRs reflects that.

The VA MPRs take into account that the units are on the same property, and have stipulations that define how the units must be separated. There are minimum requirements that are intended to make sure that each unit on the property has a proper amount of privacy and accessibility. The requirements work towards keeping each living area its own entity, and that includes keeping utilities separate for each unit. Obviously there are some exceptions to the separate utilities rule to provide some flexibility for units where that is not possible but it doesn’t present a problem.

The exceptions are pretty lenient and will cover most legitimate circumstances. For example, the first exception is that units under a single owner can share some or all of the utilities as long as each unit has its own shut-off point. The VA lender’s guide states: “Living units under one owner may share water, sewer, gas, or electricity as long as there are separate service shut-offs for each unit.” That is essentially the only exception for a property under a single owner, but that one exception covers the great  majority of cases as most multi-unit properties follow that common sense plan. The other exception is for units that are under separate ownership. These can share connections as long as they are covered by both an easement and a maintenance agreement that are both approved by the VA. Per the VA lender’s guide: “Living units under separate ownership may share connections from the main to the building line when those connections are protected by easement or covenant, and a maintenance agreement acceptable to Department of Veterans Affairs.”

The VA MPRs also have requirements that utilities cannot pass over, under, or through any other unit. The exception to this is if a legal provision has been made that allows permanent rights of access to maintain and repair the utilities without trespassing on the adjoining properties. This kind of arrangement makes a lot of sense and is usually not too cumbersome of a requirement to comply with. The VA allows some things to be shared among the units, such as a laundry facility or storage area. Heating equipment such as the water heaters can be all located in a common area, but there must be separate and self-contained spaces for each living area. Privacy is obviously a very important part of a long-term living arrangement, which the VA loan is intended to help provide a veteran with. As such, it makes sense for the VA MPRs for multi-family units to have strict requirements on the level of privacy that each unit enjoys.

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