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Can a VA Borrower Rent Out the Home Purchased with a VA Mortgage?

There are many reasons why a borrower who owns a home purchased with a VA insured mortgage would consider renting out his or her property.

Active duty military members who are being reassigned to a new base, for example, might want to keep the home but can’t occupy it for the length of the new tour. Other borrowers may fall on tough economic times and want to explore renting the home as opposed to selling it.

But can a homeowner paying a VA mortgage rent the home out? Is this allowed under the terms of the VA home loan?

The short answer is no–but there are options.

The reason a VA borrower isn’t allowed to rent out the property is because of the primary occupancy rule. VA mortgage loan rules require the borrower to certify they will use the property as their primary residence. No investment properties or summer homes may be purchased with a VA mortgage.

But there is an alternative to selling the property. A VA borrower is permitted to apply for an Interest Rate Reduction Refinancing Loan or IRRRL, which does not have the same occupancy requirements than a new purchase VA home loan. According to the VA official site, “The occupancy requirement for an IRRRL is different from other VA loans.  When you originally got your VA loan, you certified that you occupied or intended to occupy the home.  For an IRRRL you need only certify that you previously occupied it.”

The rules for a VA IRRRL allow what the VA calls a “no money out of pocket” transaction, “by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.” VA rules do require the interest rate on the new loan to be lower than the original rate, but there is an exception for those who wish to refinance an adjustable rate mortgage to a fixed rate mortgage.

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About Joe Wallace

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association.

26 Responses to Can a VA Borrower Rent Out the Home Purchased with a VA Mortgage?

  1. Tim M. says:

    The primary occupancy rule only applies when you first buy the house. What if they buy the house with a VA loan, use it as their primary residence, then rent it out and buy a different house? There’s no stipulation on how long you must live in the house, nor does it state that you must notify them if you move out.

    • Joe Wallace says:

      From the VA official site at VA.gov:

      “Q: I want to buy a house with a VA loan. Do I need to occupy the property?

      A: The law requires that you certify that you intend to occupy the property as your home.”

      Also:

      “VA requires the veteran to occupy the subject property as his/her primary residence. The normal guideline is within 60 days from the date of closing. However this may be extended to 12 months if the veteran has a specific date that s/he will be moving in and a particular reason/future event that is causing the delay. Use of the property as a second home or seasonal vacation home does not satisfy the occupancy requirement.

      For active duty military personnel who are deployed from their permanent duty station considered to be in a temporary duty status and able to provide a valid intent to occupy, the spouse can fulfill the occupancy requirement. Other circumstances are addressed in VA Lender’s Handbook, Section 3.05, or can be discussed with the Regional Loan Center with jurisdiction over the property.”

      Additionally:

      “Can you give a mortgage for an interest rate reduction refinance (IRRRL) when the veteran no longer occupies the property?
      Yes, previous occupancy of the subject property is sufficient. The interest rate reduction refinance loan is the only VA loan where the veteran or his spouse does not have to occupy the property as his primary residence. Specifics on occupancy requirements can be found in Chapter 3 of VA’s Lender Handbook.

  2. lila says:

    would like to know im a VA and i have a VA loan can i rent my home i have only live in the property for 1 yr and 4months now i want to rent it with the option to buy but it will be leased for the meantime being till buyer can buy i was told that i have to live in property for at lease 2years and that i could rent it as i got a va loan and cant make profit

    • Joe Wallace says:

      As mentioned in the article, “A VA borrower is permitted to apply for an Interest Rate Reduction Refinancing Loan or IRRRL, which does not have the same occupancy requirements than a new purchase VA home loan. According to the VA official site, “The occupancy requirement for an IRRRL is different from other VA loans. When you originally got your VA loan, you certified that you occupied or intended to occupy the home. For an IRRRL you need only certify that you previously occupied it.”

      If you refinance the property with a VA IRRRL, it’s legal for you to rent out the home.

  3. Guerrette says:

    Dear Joe: Is there a time limit from the time you bought your home using your VA Home Loan eligibility to being able to refinance it using the VA IRRRL? Is a VA IRRRL basically a paperwork transaction or is there actually selling, buying, closing cost, aka money needed for a down payment, etc.? Thanks :)

    • Joe Wallace says:

      There may be a time limit based on the rules of your financial institution, but a VA IRRRL does feature fees and costs. No down payment is required and some lenders may offer a “no out-of-pocket” VA IRRRL option which would roll the costs of the refinancing loan into the new mortgage.

  4. Tony Brink says:

    Are there any restictions for renting the house while using it as your primary home?

    • Joe Wallace says:

      As long as the borrower maintains primary occupancy, it’s permissible to rent out the unoccupied units in a multi-unit properties. I personally can find no restriction against renting out spare bedrooms, etc as long as the borrower does not violate VA loan occupancy rules/VA loan rules in general, or any agreements in the contract or home owner’s association rules that may apply.

  5. Jason says:

    I have looked high and low to try and refinance my VA loan which I previously occupied but had to rent because of a reassignment. I cannot find a lender that will utilize the IRRRL without an appraisal and that appraisal has to be less than what I owe. I currently pay 6.25% so I stand to save at least $200-$300/month if I can find someone to refi my VA loan. I have never had a missed payment, however it is very difficult to find someone who is licensed to write mortgages in the state of Wyoming. Do you have any leads or suggestions. Much appreciated.

  6. Carlos C says:

    Joe, I’m in the process of refinancing my house via an IRRRL. Once the process is finalized, I plan on renting the house. Am I eligible to purchase a bigger house with my VA? I have taken custody of my 3 children and my 18 daughter will come live with me while she attends college.

    • Joe Wallace says:

      You would need to contact the VA to discuss your options for your remaining entitlement and/or when you can get full entitlement restored. Call the VA at 1-800 827-1000.

  7. Mike says:

    I recently closed on a home using a VA loan. One week after closing and three weeks before we were scheduled to move into the home, my orders were revoked. Is there any way to appeal the occupancy requirement? We plan on retiring in this home in 2-3 years and don’t want to sell it.

    • Joe Wallace says:

      The language of the occupancy agreement in your sales contract will tell you everything you need to know–but basically the only way to “get around” the VA occupancy law is to refinance using a VA Interest Rate Reduction Refinance Loan–the occupancy law for VA IRRRLs states that you must certify the home was previously your main residence rather than requiring you to live there as the primary residence as a condition of loan approval.

  8. Irin Smith says:

    Just approved for VA home loan. The property has two separate, fully functional homes on the lot. Is it possible to rent out one of the home while I live in the other home. (Arizona). Thanks for any thoughts.

    • Joe Wallace says:

      That’s a unique situation but as long as you meet the occupancy agreement on the property, renting out the vacant units is not a problem under the rules of the VA loan program.

  9. irin smith says:

    Feeling discouraged. We love the home (with 2 separate residences on property). The seller accepted our offer. It is a foreclosure. The house has been vandalized. The stove top, refrigerator, one of the two toilets taken, as well as a bathroom vanity. The utility sink in a laundry room also was ripped from the wall. The copper pipe are capped off so inspection on the water was not able to be completed. We paid for an inspection and found out that the main house airconditioner was blowing air but not cooling. Inspector thought it may be the compressor.
    This will not pass VA appraisal I am afraid. We asked the seller to repair the things but they requested a VA inspection first. Confused. That is about $450 dollars. Then the seller could say they will not repair. Or, the seller could repair all and then we have to pay for a second VA appraisal.
    What exactly would a VA appraiser want? there are two houses, one is fully functional and no issues.
    We are going to up the anty and raise offer and ask the seller to complete repairs BEFORE the VA appraisal.
    Thanks for your time and thoughts. This is a very disappointing situation since we have been trying to get everthing together for a few years. (and trying to get into a house on a shoestring budget).

    • Joe Wallace says:

      There’s no way to answer what specifically the appraiser wants because much depends on your state and local building code–the home must be up to code as well as meeting VA minimum property requirements. You would need to consult the local authority to get more information on whether the conditions you mention meet or violate building code in your area.

  10. Bridget says:

    Hi Joe, I have a somewhat related question. My husband and I currently have a VA mortgage for our home. Which we have lived in for almost five years. We are considering the possibility of moving our family in with and assisting an elderly relative for an indefinite amount of time. The relative’s home is fully paid for so we would not be required to pay rent. We have been planning to put our current house back on the market (tried a year ago with almost no interest as we owe too much to sell it for cheaper but property values in our neighborhood have dropped considerably since we bought it). We have a person who would be interested in renting our home while it is for sale or at least while we are living with our relative. Is this a situation that is at all feasible with our current loan? Should we look in to refinancing with the IRRRL? If our home technique lay still remains our legal address could we let just a bedroom of our home to the tenant? Wondering what my first step should be and who I should contact to pursue any possibilities further. Thanks in advance for your help!

    • Joe Wallace says:

      Borrowers who are paying on a new purchase VA home loan are required to maintain occupancy in the home, but are not prevented from renting out a room to a tenant–the key is that the borrower obligated on the VA loan must occupy the property unless it has been refinanced with a VA IRRRL or otherwise paid in full. (VA cash out refinancing also has an occupancy requirement, FYI.)

  11. dave says:

    many comments about occupancy – what is the PENALTY for not occupying the home and decided after closing to rent it?

    • Joe Wallace says:

      That may depend on the terms and conditions of your loan agreement and/or the discretion of the Department of Veterans Affairs. Contact the VA directly for assistance at 1-800 827-1000.

  12. wes says:

    Joe you keep referencing the article where it says “intend to occupy” the home. I bought my home and “intended to occupy” it as I have done for nearly two years. I am getting a new job and moving and will take a huge financial loss if I try to sell right now. Why can’t I rent it out if I bought the property with the intent of occupying it? By the policy I am not in violation of anything; sounds more or less like the VA tied their hands with their own beuracratic lingo.

    • Joe Wallace says:

      A recent phone call to the VA Regional Loan Center in Cleveland revealed that the VA interprets the law on occupancy to mean the borrower’s specific intent to occupy AT CLOSING TIME. According to the Cleveland Regional Loan Center, the borrower is free to purchase again with any remaining entitlement so long as he or she has the same intent to occupy the new purchase home at closing time.

  13. Greg says:

    Started a VA refi on my current home 6 mos. ago. Just got the loan to upgrade my home. During the time slot, I got married and need a larger home. Is it possible for me to rent out my VA home and purchase a larger home that has room enough for my new family?

    • Joe Wallace says:

      Assuming you are otherwise qualified, you can apply for a new purchase VA loan using remaining entitlement or bonus VA loan entitlement depending on circumstances, but you will have to certify occupancy in the new home.

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