How Zoning Impacts VA Loan Eligibility

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Just because you want a VA home loan doesn't mean that you're necessarily buying a traditional home. Multi-use buildings are common in urban settings.

Regardless of the type of property, getting approved for a VA loan is the first step. You can be preapproved before you even decide what kind of property you want to buy. This will work in your favor since you can begin your search knowing exactly how much you’re able to spend.

For some, securing VA loan approval can be the hardest part. Next, you can examine the VA’s requirements for buying multi-use properties. The VA Lender's Handbook, which is available online, states, “The appraiser must estimate the remaining economic life as a single number and include specific comments if the estimated remaining economic life is less than 30 years.”

In other words, as long as the appraiser determines the building will be salable for at least 30 years, the VA will allow the purchase.

What About Multi-Use Properties?

The VA says a property that has both residential and business uses may be eligible for a VA loan if:

  • the property is primarily for residential use,
  • the non-residential use does not impair the residential character,
  • the property contains no more than one business unit, and
  • the property is legally permitted and conforms to current zoning, or is a legal, non-conforming use that is accepted by the local authority.

Also, for the appraisal, only the residential portion of the property is considered.

Keep Future Viability in Mind

One important consideration to make, in the name of wise housing purchase, is the viability of your multi-use property. While the living arrangements might be considered viable by the VA for three decades, if the property also includes a commercial portion, that part may become less marketable over time or even become unsalable.

If you are operating a small business or offering a service out of the building, you should consider what may happen down the road. If you don't plan on ever selling the property, then this isn't as big a consideration, but if you think it's possible you may have to sell, understanding what the business portion of the building will do over the course of a few decades is crucial.

Take the Next Step

If you're ready to move forward, or just want more information, the first step is to get no-obligation rate quotes.

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