Some of the most frequently asked questions about VA home loans involve the rules for occupancy.

What do the VA loan rules say about taking possession of the home after closing, renting out your home purchased with a VA mortgage to someone else, and refinancing rules? To begin, let’s see what the VA Lender’s Handbook says about basic occupancy requirements. According to Chapter Three, Section Five:

“The law requires a veteran obtaining a VA-guaranteed loan to certify that he or she intends to personally occupy the property as his or her home. As of the date of certification, the veteran must either

• personally live in the property as his or her home, or
• intend, upon completion of the loan and acquisition of the dwelling, to personally move into the property and use it as his or her home within a reasonable time.”

It’s important for VA loan applicants to know that A) there is a federal law requiring use of the home as the primary residence, and B) the borrower is required to certify in writing that he or she will obey that law.

It’s also important to remember what the VA says about the occupancy law when it comes to refinancing loans and other VA mortgages:

“The above requirement applies to all types of VA-guaranteed loans except IRRRLs. For IRRRLs, the veteran need only certify that he or she previously occupied the property as his or her home.”

That means that a VA borrower would be permitted to rent out the home purchased with a VA-guaranteed loan if they have refinanced the original VA mortgage with a VA Interest Rate Reduction Refinancing Loan.

When is the borrower required to take possession of the property and move in according to VA mortgage loan rules? The VA Lender’s Handbook states that occupancy must begin “within a reasonable time”. Specifically, according to Chapter Three, Section Five, “Occupancy within a ‘reasonable time’ means within 60 days after the loan closing. More than 60 days may be considered reasonable if both of the following conditions are met:

• the veteran certifies that he or she will personally occupy the property as his or her home at a specific date after loan closing, and
• there is a particular future event that will make it possible for the veteran to personally occupy the property as his or her home on a specific future date.”

VA loan rules say that occupancy “at a date beyond 12 months after loan closing” is generally not considered a reasonable amount of time. In order to qualify for the “beyond 60 days” exception, the borrower must furnish proof that justifies the later move-in date, such as military orders showing a retirement date or a return from overseas assignment date. For more assistance with VA occupancy issues or concerns, call the VA directly at 1-800-827-1000.

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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.

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