You have [VA loan eligibility](https://www.va.gov/housing-assistance/home-loans/), you've heard house hacking is the fastest path to building rental income, and you're wondering if you can combine them. You can. And it's one of the most powerful wealth-building strategies available to veterans and service members.
Why VA Loans Change the House Hacking Math
Most house hackers start with FHA loans requiring 3.5% down or conventional loans at 5% minimum. On a $400,000 duplex, that's $14,000 to $20,000 you need to save before you can even make an offer.
VA loans require zero down payment. That same $400,000 duplex? You need closing costs (roughly 2-3% of purchase price) and that's it. You're looking at $8,000 to $12,000 instead of $22,000 to $32,000.
But the bigger advantage isn't the down payment. It's the absence of mortgage insurance.
FHA loans charge mortgage insurance premium (MIP) for the entire loan term. On a $400,000 loan, that's roughly $280 per month that does nothing but satisfy a government requirement. Over a 30-year loan, you'll pay over $100,000 in MIP.
VA loans have no monthly mortgage insurance. None. You pay a one-time funding fee (typically 2.15% for first-time use, which can be rolled into the loan), and then your monthly payment only includes principal, interest, taxes, and insurance.
This difference alone can make a marginal deal into a good one.
Property Requirements for VA House Hacking
VA loans work on properties with 1 to 4 units, but you must occupy one unit as your primary residence. You need to move in within 60 days of closing and live there for at least 12 months.
The property also needs to meet VA minimum property requirements (MPRs). These are similar to FHA standards: the home needs working utilities, no major safety hazards, and a roof that isn't about to fail. Most properties in decent condition will pass.
One thing that trips people up: the appraisal. VA appraisers can be stricter than conventional appraisers, and they're looking at the property from a livability standpoint. If the property needs significant repairs, you may need to negotiate seller credits or complete repairs before closing.
Running the Numbers on a VA House Hack
The analysis for a VA house hack follows the same principles as any house hack, but your baseline costs are lower. Here's the framework I use:
Calculate Your All-In Monthly Cost
> Monthly Housing Cost = Mortgage Payment + Property Taxes + Insurance + HOA (if any) + Maintenance Reserve
With a VA loan, your mortgage payment will be lower than FHA for two reasons: no down payment means a larger loan (which increases payment), but no mortgage insurance (which decreases payment). The mortgage insurance savings usually wins.
Calculate Net Rental Income
For the units you'll rent out, estimate realistic market rent. Don't use the listing agent's optimistic numbers. Check Zillow, Rentometer, and Craigslist for comparable units in the same neighborhood.
> Net Rental Income = Gross Rent - Vacancy Allowance (5-8%) - Property Management (even if self-managing, budget 8-10%)
I know you're thinking you'll manage it yourself and don't need that 8-10% budget. You're probably right for year one. But your analysis should reflect what happens when you deploy overseas, change duty stations, or just get tired of 2 AM maintenance calls. Build it into your baseline.
Calculate Your Effective Housing Cost
> Effective Monthly Cost = Total Housing Cost - Net Rental Income
This is the number that matters. It's what you're actually paying to live there after rent from other units offsets your costs.
A good VA house hack should get your effective monthly cost below what you'd pay in rent for a comparable single unit. A great one gets you close to zero or even positive.
Worked Example: San Antonio Duplex
Let me walk through an actual analysis on a duplex in San Antonio, a market that works well for military buyers due to multiple bases and strong rental demand.
The Property
VA Loan Terms
Monthly Cost Breakdown
| Expense | Amount |
|---|---|
| Principal & Interest | $2,486 |
| Property Taxes | $642 |
| Insurance | $185 |
| Maintenance Reserve (5%) | $124 |
| **Total Monthly Cost** | **$3,437** |
Rental Income Analysis
| Item | Amount |
|---|---|
| Gross Rent (Unit B) | $1,350 |
| Vacancy (5%) | -$68 |
| Management Reserve (8%) | -$108 |
| **Net Rental Income** | **$1,174** |
Your Effective Housing Cost
> $3,437 (total cost) - $1,174 (net rental income) = $2,263/month
Comparison to Renting
A comparable 2BR/1BA apartment in the same area rents for $1,400-$1,500/month. So you're paying about $800 more than renting, but here's what that extra $800 buys you:
The real comparison isn't $2,263 vs $1,400. It's $2,263 with wealth-building vs $1,400 with nothing to show for it.
When You Leave: The Exit Analysis
After your 12-month occupancy requirement, you can rent out your unit and move. This is where the VA house hack really shines.
Using the same San Antonio duplex, if you rent Unit A for market rate ($1,350), here's how the numbers change:
| Item | Amount |
|---|---|
| Gross Rent (Both Units) | $2,700 |
| Vacancy (5%) | -$135 |
| Management (8%) | -$216 |
| **Net Rental Income** | **$2,349** |
| Expense | Amount |
|---|---|
| Total Monthly Cost | $3,437 |
| Net Rental Income | -$2,349 |
| **Monthly Cash Flow** | **-$1,088** |
Negative cash flow? Yes, at current interest rates and this purchase price, the duplex doesn't cash flow when fully rented. This is common in 2024-2025 market conditions.
But consider: you're paying $1,088/month to own a $385,000 asset that's appreciating, generating equity, and providing tax benefits. You also have the option to:
I wouldn't buy a property solely expecting appreciation to bail out the numbers. But when you're building long-term wealth and the holding cost is manageable, negative cash flow on a fully-rented property isn't automatically a deal-breaker.
The VA Loan Funding Fee: Worth Understanding
The funding fee is the one significant cost unique to VA loans. Here's how it breaks down:
| Down Payment | First Use | Subsequent Use |
|---|---|---|
| 0% | 2.15% | 3.30% |
| 5%+ | 1.50% | 1.50% |
| 10%+ | 1.25% | 1.25% |
Veterans with service-connected disabilities are exempt from the funding fee entirely. If you have even a 10% disability rating, you pay no funding fee. On a $385,000 loan, that's over $8,000 saved.
Even if you pay the funding fee, rolling it into the loan means you're financing it at your mortgage rate over 30 years. On a $8,278 fee at 6.5%, that adds about $52/month to your payment. Compare that to FHA's $280/month MIP, and the VA loan still wins by over $200/month.
Common Mistakes in VA House Hack Analysis
Ignoring the Funding Fee in Cash-to-Close
If you roll the funding fee into your loan (which most people do), you don't need it at closing. But some buyers see "2.15% funding fee" and assume they need that cash upfront. They don't. Your cash-to-close is typically just closing costs, prepaid items, and any earnest money not already deposited.
Using Owner-Occupied Rates for Exit Analysis
When you convert to a rental property, you may want to refinance eventually. Investment property rates are 0.5-0.75% higher than owner-occupied rates. Your exit analysis should account for this if you're planning to refinance.
Forgetting You Can Use VA Again
Your VA entitlement is reusable. After you sell or pay down the loan, your full entitlement restores. You can also have multiple VA loans simultaneously if you have enough remaining entitlement. This means your first house hack isn't your only house hack.
Some investors buy a duplex, live there for a year, move to a fourplex using remaining entitlement, and repeat. After 3-4 cycles, they own a small portfolio acquired with minimal down payments.
Skipping the Rent Survey
Don't trust listing agents or sellers on rental rates. Spend 30 minutes on Zillow, Apartments.com, and Craigslist looking at actual listings for similar units. Call property managers in the area and ask what they'd expect to get for a unit like yours. The difference between $1,350 and $1,200 rent is $1,800/year in your effective housing cost.
Markets That Work Well for VA House Hackers
Look for markets with these characteristics:
Texas (San Antonio, Killeen, El Paso), the Southeast (Jacksonville, Fayetteville, Columbus GA), and parts of the Midwest (Kansas City, Indianapolis, Oklahoma City) tend to work better than coastal markets where prices have outpaced rents.
Running Your Own Numbers
The framework above works for any VA house hack analysis. Start with your all-in monthly cost, subtract net rental income, and compare to renting. Then model the exit scenario to understand what happens after occupancy.
The [house hack calculator](/tools/house-hack) can run these numbers for you, including the VA-specific adjustments for funding fee and no mortgage insurance. Plug in a few properties you're considering and see how they compare.
VA loans remove the biggest barrier to house hacking (the down payment) and eliminate the biggest ongoing cost (mortgage insurance). If you have the benefit, use it.