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Getting a VA Loan With Marijuana Income

Without major changes to federal drug laws, Veterans whose income relies heavily or solely on the production or sale of marijuana will likely remain in limbo when it comes to using their VA loan benefit.

Some Veterans working in the cannabis industry are seeing their homebuying dreams go up in smoke.

The heart of the problem is the disparity between state and federal drug laws. Despite the easing of marijuana laws in many states, cannabis remains illegal at the federal level.

That gap creates considerable uncertainty for mortgage lenders and investors. Because of it, most lenders won’t count income derived from the cannabis industry as stable, reliable and likely to continue.

Veterans whose income is more tangentially connected to the industry may be able to move forward with a VA loan. But Veterans whose income relies heavily or solely on the production or sale of marijuana will likely remain in limbo without major changes to federal drug policy.

Counting Cannabis Income

The conflict between state and federal drug laws puts lenders in a tight spot.

Like with any income and employment scenario, lenders will take a closer look at the Veteran’s specific situation before making a determination about effective income. Polices and guidelines can always vary by lender and loan type.

Generally, here’s how this analysis tends to look:

  • Does the Veteran own a cannabis company?
  • Does the Veteran own a company that is solely supported by the production or sale of marijuana?
  • Does the Veteran work for a cannabis company?

If the answer to any of those questions is “Yes,” then it can be tough for Veterans to qualify for a VA loan.

There’s also room for nuance in some cases. For example, say a Veteran owns a marketing firm with a cannabis company on its client roster. That’s likely to be fine, because the cannabis client represents a sliver of the Veteran’s overall business income.

Recent legislative changes also carved out a legal framework for hemp and cannabidiol, better known as CBD. Lenders will typically be able to count income for Veterans working with these product areas.

To be sure, every VA buyer’s situation is different. Lenders will evaluate income and employment scenarios on a case-by-case basis.

Buying or Refinance Cannabis Properties

Part of the VA appraisal process includes a look at broad property conditions. Appraisers visit the properties in person and conduct a visual assessment.

While less frequent, VA buyers can also run into potential hurdles in purchasing or refinancing properties with actual marijuana on-site or evidence of commercial marijuana production.

Talk with a Veterans United loan specialist if you have questions about a particular property and what might be feasible with your VA loan benefit.