Are There Exceptions to the VA Occupancy Rules?
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.