VA Loan Occupancy Rules Between States: A Reader Question
A reader asks, “If a veteran has a VA loan in another state, can a second VA loan be obtained in a different state?”
The VA loan occupancy rules require a borrower to certify that a home purchased with a VA guaranteed loan is to be used for his or her personal residence and that the residence must be used as the primary address. A borrower paying on a new purchase VA mortgage cannot have two “primary addresses” so in most cases, a strict interpretations of the rules would mean the answer to this question is no.
But if the borrower refinances the first mortgage with a VA Interest Rate Reduction Refinancing loan (IRRRL), also known as VA Streamline Refinancing, it may be possible to apply for another new purchase loan once the refinance loan is in place.
The reason for this is because VA Streamline Refinancing does not require the borrower to certify the home is still being used as the primary address. The borrower is only required to show that the home was being used as the primary residence prior to the refinance loan application.
VA loan applications require the borrower to submit debt-to-income information for any new purchase VA loan application, so in situations like these, the borrower’s existing refinance loan payment would be factored into that ratio.
Can the borrower afford TWO mortgages at once? That would be an important question at application time. Borrowers should discuss these issues with a loan officer if there’s any question about being able to afford the loan in the eyes of the lender or the Department of Veterans Affairs.
VA loan rules are designed this way for several reasons, but an important part of the equation is that VA loans are not intended for investment properties. A borrower who wishes to purchase a home to rent out would have to buy a multi-unit property and live in one of the units personally, renting out the other unused units.
Do you have questions about VA home loans? Ask us in the comments section.