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The Zero-Down Gauntlet: Stress-Testing a VA Multifamily Dea | EP 1
The Zero-Down Gauntlet, Stress-Testing a VA Multifamily Deal.mp3
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Can a 19-year-old really buy a four-unit apartment building with zero money down using a VA loan? On this episode of The Breakdown, we move beyond theory and build the exact financial model required to answer that question. We’re doing a deep-dive stress test to see if the dream can survive contact with reality by analyzing the deal from every angle, from funding fees and vacancies to shock events and deployment scenarios.
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Accurately estimating your full monthly payment (Principal, Interest, Taxes, and Insurance) begins with ditching generic mortgage calculators and focusing on the specifics of a VA loan. The most common mistake is failing to account for the VA funding fee. According to the VA's own buyer's guide, this fee varies based on whether it's your first time using the benefit. A critical detail from the VA's loan handbook is that this funding fee can be rolled into the loan amount. However, this means your loan principal will be higher, which in turn increases your monthly payment—a crucial detail to model accurately, especially as a recent Mortgage Bankers Association report shows VA loan delinquencies are on the rise.
Actionable Takeaway: Do not use a generic mortgage calculator; instead, find the correct VA funding fee for a first-time multifamily purchase and ensure you add it to your total loan amount to calculate your true monthly PITI.
"That's not to scare you, it's to show you that you have to be precise from day one." — (01:57)
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To build a reliable income projection, you must treat your own Basic Allowance for Housing (BAH) as your "anchor tenant" and the other units as market-rate rentals. You can't guess on your BAH; you must use the Department of Defense's official BAH calculator online, inputting your projected rank and the property's zip code. For the other three units, avoid using optimistic rental listings. Instead, use a conservative and verifiable source: the Department of Housing and Urban Development (HUD), which publishes Fair Market Rents (FMRs) for every county in the U.S. A CNA report on BAH confirms this link, noting that BAH rates are closely tied to HUD's FMR data.
Actionable Takeaway: Use the official Department of Defense BAH calculator to verify your personal housing allowance and use HUD's Fair Market Rent data for the property's county to set conservative rent estimates for the other units.
"The BAH is your anchor tenant, basically. You can't guess." — (02:22)
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