VA Loan Reader Questions: Occupancy Requirements
A reader asks, “I feel like the home I’ve purchased with my VA loan is too big for us right now and I’d like to consider getting into something more our size. I don’t want to sell it because when we start having kids it will be perfect. I’ve lived in the house for over a year and under one year and have plenty of entitlement left because my country rates over 840k and my house was only about 230. Can I buy something the more manageable with a VA loan and rent out the house I currently live in?”
In these situations, the first thing a borrower should do is to read the purchase contract and related paperwork signed when the home was bought. What you’re looking for is the document you signed certifying your understanding of the VA occupancy agreement. In many cases a borrower will have completed and signed VA Form 26-1802a – HUD/VA Addendum to Uniform Residential Loan Application, which includes the following legally binding certification:
“I now actually occupy the above-described property as my home or intend to move into and occupy said property as my home within a reasonable period of time or intend to reoccupy it after the completion of major alterations, repairs or improvements” or “My spouse is on active military duty and in his or her absence, I occupy or intend to occupy the property securing this loan as my home.”
Additionally, VA Pamphlet 26-7 describes the occupancy requirements as follows:
“The veteran need not maintain a physical presence at the property on a daily basis. However, occupancy “as the veteran’s home” implies that the home is located within reasonable proximity of the veteran’s place of employment. If the veteran’s employment requires the veteran’s absence from home a substantial amount of time, the following two conditions must be met:
• the veteran must have a history of continuous residence in the community, and
• there must be no indication that the veteran has established, intends to establish, or may be required to establish, a principal residence elsewhere. (Emphasis ours)”
The bottom line here? Unless you refinance the existing property with a VA Streamline Refinance/IRRRL or conventional mortgage, VA loan rules as stated here would seem to preclude you from purchasing another home with a VA mortgage.
Do you have questions about VA home loans? Ask us in the comments section.