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Military, PCS & VA

Can I keep my Colorado Springs home as a rental and use my VA benefit again?

ByWeldon HobbsTeam Hobbs RealtyPublished Last reviewed

Short answer: Often, yes. Many service members keep their home as a rental when they PCS and use their remaining VA entitlement to buy their next primary residence. How much you can borrow with no down payment depends on how much entitlement is tied up in the first home, and you'll need to qualify for both mortgage payments. The new home must be your primary residence. Before you decide, make sure you're ready to run the rental like a business, with cash reserves, the right contacts, and a legally sound lease.

How using your VA benefit again works

When you keep a home you bought with a VA loan, part of your entitlement stays tied to it. You can still use your remaining entitlement, sometimes called second-tier or bonus entitlement, to buy a new home, as long as the new home will be your primary residence. VA loans can't be used to buy investment properties, but your former home can become a rental after you move into your new one.

How far your remaining entitlement goes depends on the county loan limit where you're buying. In El Paso County, the 2026 limit is $832,750. See how VA loan limits work in El Paso County for a worked example.

Ways to get your full entitlement back

  • Sell the home and pay off the VA loan. This is the most common way to restore full entitlement.
  • Have another eligible veteran assume your loan and substitute their own entitlement.
  • Use a one-time restoration. If you've paid off the first VA loan but want to keep the home, VA allows a one-time restoration without selling. After that, future restorations generally require selling the properties you bought with VA loans.

Your lender can tell you how much entitlement you have left and whether restoration makes sense for you. See how to choose a lender for a VA loan.

Qualifying for two payments

Keeping your home means carrying two mortgages, at least on paper. Your lender will count the first mortgage in your debt-to-income ratio. Rental income from the first home can sometimes help offset that payment, but lenders require documentation and often count only a portion of the rent.

The VA funding fee is also higher when you use your benefit again: 3.3% of the loan amount with less than 5% down, compared with 2.15% the first time. Veterans with a service-connected disability rating are exempt from the funding fee.

Lessons from being landlords ourselves

Kristen and I have rented out our own homes for about 20 years, including homes we kept on purpose when orders came. Here's what we've learned. None of this is a rule; it's what has worked for us.

Set aside a reserve before you need it. Our practice has been to set aside about $15,000 for the day something breaks. Not if, but when. It turns a stressful repair into a manageable one.

Run it like a business. Keep a separate bank account for the property. Rent deposits go in, and the mortgage payment and expenses go out. It keeps the finances clear and makes tax time much easier.

Know who to call. If you self-manage, have your points of contact ready before you leave, so when a tenant calls about a problem, you know exactly who to send. If you hire a property management company, make sure they know what they're doing, and understand how they'll serve you and every cost involved.

Use a legally sound lease, and stay current. Use a lease that has been properly reviewed, and keep your practices above board and up to date with the law. Colorado landlord-tenant rules can change, so a property manager or an attorney can help you stay current.

Be honest about your mindset. Owning a rental can pay off. But if just thinking about it stresses you out, it's probably not worth it for you. There's no wrong answer.

A few things to check before you decide

  • The numbers. Estimate realistic rent, then subtract the mortgage, insurance, property taxes, metro district taxes, HOA dues, maintenance, vacancy, and management. Will the home cover itself?
  • HOA rules. Some HOAs restrict or regulate rentals. Check before you commit.
  • Taxes. Renting a former home can affect taxes when you eventually sell, including how the federal home-sale exclusion applies. Service members may have special rules. Talk with a CPA.
  • How long you'd hold it. My guidance is to plan on holding a home for about five years to build equity. If you might PCS sooner, buying a home that would work as a rental gives you that option.

What could change the answer

Your options depend on your remaining entitlement, your income and debts, the rent the home can earn, and your plans. If you've paid off the first home, a one-time restoration may give you full entitlement. If the first home wouldn't rent for enough to cover its costs, selling may be the better choice.

When to talk with a professional

A VA-experienced lender can calculate your remaining entitlement and how the rental affects your qualifying. A CPA can explain the tax side of renting and eventually selling. A property manager can estimate rent and management costs. I can help you look at the real estate side: what the home would likely rent for, what it would sell for, and how the two paths compare.

If you have orders and aren't sure whether to keep your home or sell it, let's run the numbers together.

Related questions

About the author

Weldon Hobbs is a Colorado Springs real estate professional and co-founder of Team Hobbs Realty, affiliated with The Platinum Group, REALTORS®. He is a U.S. Air Force Academy graduate and retired Air Force officer who, with his wife, Kristen, kept homes as rentals throughout their military career. He holds an MBA and the PMP, Certified Financial Coach, SRES®, and MRP (Military Relocation Professional) credentials. He is not a loan officer and works alongside lenders experienced with VA loans.

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