VA requirements

Are There Exceptions to the VA Occupancy Rules?

January 5, 2015

Are There Exceptions to the VA Occupancy Rules?

va loanVA loans are similar to FHA loans in the fact that the borrower must occupy the home as their primary residence.

VA mortgage requirements state that in normal circumstances the borrower must take possession of the property within 60 days of closing.

“Possession,” as defined by the VA Lender’s Handbook, means the borrower will “personally live in the property as his or her home.”

In cases where construction or renovation of the property is still underway at closing, the buyer must “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.”

All VA-insured mortgages have this requirement, but the VA does make allowances for those who cannot move in right away due to circumstances such as deployment, overseas tours or military retirement dates. The VA will, on a case-by-case basis, make exceptions for borrowers who cannot move in within 60 days or less, but a specific move-in date is required.

The VA does not automatically extend the move-in date, borrowers must make arrangements with the lender and the VA ahead of time.

But an extension of the move-in date is not the same as an exception to the primary occupancy rule. All VA loans require the borrower to use the property as the primary residence except one. Primary occupancy is not required for any home refinanced with a VA Interest Rate Reduction Refinancing Loan (IRRRL). The borrower is only required to certify that the home was the primary residence under the original loan.

The VA offers this example of a way to use a VA IRRRL; “A veteran living in a home purchased with a VA loan is transferred to a duty station overseas. The veteran rents out the home. He/she may refinance the VA loan with an IRRRL based on previous occupancy of the home.”

That statement, taken directly from the VA Lender’s Handbook, answers one frequently asked question many vets have when facing an overseas tour of duty or re-assignment far from the home they purchased with a VA mortgage.

It IS possible to rent out a home purchased with a VA mortgage — so long as the borrower has refinanced with a VA IRRRL. Like any mortgage loan product, an IRRRL takes time in order to complete an application and get a response from the lender.

If you find yourself in a situation where you may need to refinance in order to keep the home without being the primary occupant, don’t wait until you get military orders to relocate before exploring your options.

6 Comments
  1. Greg Breneman

    I want to refinance and use cash out to pay off consumer debt. This home is my only home but because of employment I must work away from the home during the week. My wife and family live in the home and attend school in the neighborhood. I have a very small apartment to avoid commuting every day. What else do I need to show to prove this is my primary residence?

    • Joe Wallace

      Best advice--discuss the situation with your lender and be prepared to furnish utility bills and other, related proof that you're using the home as your primary residence. The bills and other documents will show that the utilities are in your name, that you're paying property taxes and other localized costs. In some cases what the VA requires may be minimal if it's obvious that you're only using the other location to meet the demands of your job---the VA usually handles these situations on a case-by-case basis.

  2. Mike Frazer

    We are thinking about tearing down and rebuilding the home we recently moved into using a va home loan. The land value (without the current house) exceeds the amount owing on the VA loan. What are steps or requirements when tearing down and rebuilding a new construction home on site of existing home?

    • Joe Wallace

      Many lenders are not offering VA construction loans at this time, so the first step would be to find (if possible) a lender willing to offer a VA construction loan.

  3. Harold Peacock

    I was just denied a VA Home Loan because I currently work as a Private Security Contractor and spend more than 6 months of the year overseas working. They tell me my home will be considered a second home and not my primary residence since I will only occupy it less that 6 months out of the year. Ive lived in this town my whole life, this house is 10 minutes from where ive lived for over 30yrs now, my whole family is in this town. How is it that im being punished for having a great job that pays me well and affords me the opportunity to finally pull the trigger and purchase my first home, I just cant wrap my head around this. Ive been doing research online and all the websites say the same thing "if you have a job that contains a good amount of travel and keeps you away from home, you need to have to things" 1. The veteran must have a continuous history of residence in the community and 2. The veteran must not intent to occupy or establish residence in another location. Is that true? Is that all I need to do??? I absolutely refuse to believe this is the reason im being disqualified for my VA Loan, there has to be something that can be done!

    • Joe Wallace

      Contact the VA directly for assistance by calling 1-800 827-1000. Depending on the nature of your overseas work, "establishing a residence elsewhere" may or may not include the fixed address where you live (if applicable) at the overseas job location.

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