VA requirements

VA Loan Occupancy Rules: A Reader Comment

July 25, 2013

VA Loan Occupancy Rules: A Reader Comment


A reader recently left a comment for us that includes the following statement; “Factually, the VA only requires you to live in a home for one year after purchase.  So the “primary residence” argument is bogus.”

The Department of Veterans Affairs lists its VA loan occupancy rules in VA Pamphlet 26-7, Chapter Three, Section Five, which is titled, “Occupancy”. Let’s examine what the VA loan rules have to say on the subject of occupancy. Is the reader comment accurate? Does the VA only require a one-year occupancy to fulfill its occupancy requirement? Or does Chapter Three paint a different picture?

“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.

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.

Example: 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 is from Part A, titled “The Law On Occupancy”. It is very important to note that the VA does NOT establish any time limit whatsoever on this rule as described in this section. It simply requires the veteran to certify he or she will “personally live in the property as his or her home”.

The VA elaborates on how the occupancy requirement may be fulfilled by a spouse or dependent child in Part C of the Occupancy section. It states:

“Occupancy (or intent to occupy) by the spouse or dependent child satisfies the occupancy requirement for a veteran who is on active duty and cannot personally occupy the dwelling within a reasonable time. In the case of a dependent child, the veteran’s attorney-in-fact or legal guardian of the dependent child must make the certification and sign VA Form 26-1820, Report and Certification of Loan Disbursement.”

“Occupancy by the spouse may also satisfy the requirement if the veteran cannot personally occupy the dwelling within a reasonable time due to distant employment other than military service. In these specific cases, consult your Regional Loan Center (RLC) to determine if this type of occupancy meets VA requirements.

Note: The cost of maintaining separate living arrangements should be considered in underwriting the loan. For an IRRRL, a certification that the spouse or dependent child (or children) previously occupied the dwelling as a home will satisfy the requirement.”

Again, note that nowhere in this section is any discussion of a maximum 12-month time frame as mentioned by the reader.

It’s very important to address these issues as occupancy rules for VA loans are often misunderstood. VA Pamphlet 26-7 has the final word on this at the end of the Occupancy section, stating:

“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.

Use of the property as a seasonal vacation home does not satisfy the occupancy requirement.”

Do you have questions about VA home loans? Ask us in the comments section.

  1. C. A.

    Is there a 5 year period that must be satisfied before you can sell or move from a home purchased through a VA Loan? If so, in case of a divorce of a married couple before the 5 year period, can the spouse that leaves the home file a Quit Claim Deed in order to be removed from the loan without being penalized?

    • Joe Wallace

      There is no restriction on your selling a home purchased with a VA mortgage. However, there is an occupancy requirement as long as you own the home and have not sold, refinanced or paid off the original VA loan. You'll need to speak to your lender or a lawyer who specializes in Real Estate law about the legal requirements in your state for adding or removing people from the loan. If the spouse who wants to be removed from the mortgage is the veteran obligated on the loan, it's important to contact the VA directly for assistance at 1-800 827-1000.

  2. Robert Bressman

    I have a home now, not financed through the VA, I want to put that house up for sale and purchase another house through the VA Loan, do I have to sell my home first or will the VA let me purchase the home, while my first home is still for sale. I will be living in the home purchased through the VA Loan. Thank you

    • Joe Wallace

      The thing that would affect a situation like this is not that your home is for sale, but rather your debt-to-income ratio while you are still making payments on the old property, where applicable. If the new VA loan and the old home loan put your debt-to-income ratio higher than 40% you may have problems with loan approval unless there are compensating factors. The VA loan rules have no prohibition against you applying for a home loan when you still own a different property purchased with a non-VA loan.

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