VA loans

Can a Borrower Rent Out a Home Purchased with a VA Loan?

February 20, 2019


Can a Borrower Rent Out a Home Purchased with a VA Loan?

va loansThere are many reasons why a borrower who owns a home purchased with a VA loan would consider renting out his or her property.

Active duty military members who are being reassigned to a new base, for example, might want to keep the home but can’t occupy it for the length of the new tour. Other borrowers may fall on tough economic times and want to explore renting the home as opposed to selling it.

But can a homeowner paying a VA mortgage rent the home out? Is this allowed under the terms of the VA home loan?

The short answer is no — but there are some options.

The reason a VA borrower isn’t allowed to rent out the property is because of the primary occupancy rule. VA loan rules require the borrower to certify they will use the property as their primary residence. No investment properties or summer homes may be purchased with a VA loan.

But there is an alternative to selling the property. A VA borrower is permitted to apply for an Interest Rate Reduction Refinancing Loan or IRRRL, which does not have the same occupancy requirements than a new purchase VA home loan.

According to the VA’s official site, “The occupancy requirement for an IRRRL is different from other VA loans. When you originally got your VA loan, you certified that you occupied or intended to occupy the home.  For an IRRRL, you need only certify that you previously occupied it.”

The rules for a VA IRRRL allow what the VA calls a “no money out of pocket” transaction, “by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.”

VA rules do require the interest rate on the new loan to be lower than the original rate, but there is an exception for those who wish to refinance an adjustable rate mortgage to a fixed rate mortgage.

  1. Tim M.

    The primary occupancy rule only applies when you first buy the house. What if they buy the house with a VA loan, use it as their primary residence, then rent it out and buy a different house? There's no stipulation on how long you must live in the house, nor does it state that you must notify them if you move out.

  • Joe Wallace

    From the VA official site at "Q: I want to buy a house with a VA loan. Do I need to occupy the property? A: The law requires that you certify that you intend to occupy the property as your home." Also: "VA requires the veteran to occupy the subject property as his/her primary residence. The normal guideline is within 60 days from the date of closing. However this may be extended to 12 months if the veteran has a specific date that s/he will be moving in and a particular reason/future event that is causing the delay. Use of the property as a second home or seasonal vacation home does not satisfy the occupancy requirement. For active duty military personnel who are deployed from their permanent duty station considered to be in a temporary duty status and able to provide a valid intent to occupy, the spouse can fulfill the occupancy requirement. Other circumstances are addressed in VA Lender’s Handbook, Section 3.05, or can be discussed with the Regional Loan Center with jurisdiction over the property." Additionally: "Can you give a mortgage for an interest rate reduction refinance (IRRRL) when the veteran no longer occupies the property? Yes, previous occupancy of the subject property is sufficient. The interest rate reduction refinance loan is the only VA loan where the veteran or his spouse does not have to occupy the property as his primary residence. Specifics on occupancy requirements can be found in Chapter 3 of VA’s Lender Handbook.

  • lila

    would like to know im a VA and i have a VA loan can i rent my home i have only live in the property for 1 yr and 4months now i want to rent it with the option to buy but it will be leased for the meantime being till buyer can buy i was told that i have to live in property for at lease 2years and that i could rent it as i got a va loan and cant make profit

    • Joe Wallace

      As mentioned in the article, "A VA borrower is permitted to apply for an Interest Rate Reduction Refinancing Loan or IRRRL, which does not have the same occupancy requirements than a new purchase VA home loan. According to the VA official site, "The occupancy requirement for an IRRRL is different from other VA loans. When you originally got your VA loan, you certified that you occupied or intended to occupy the home. For an IRRRL you need only certify that you previously occupied it." If you refinance the property with a VA IRRRL, it's legal for you to rent out the home.

  • Guerrette

    Dear Joe: Is there a time limit from the time you bought your home using your VA Home Loan eligibility to being able to refinance it using the VA IRRRL? Is a VA IRRRL basically a paperwork transaction or is there actually selling, buying, closing cost, aka money needed for a down payment, etc.? Thanks :)

  • Tony Brink

    Are there any restictions for renting the house while using it as your primary home?

  • Jason

    I have looked high and low to try and refinance my VA loan which I previously occupied but had to rent because of a reassignment. I cannot find a lender that will utilize the IRRRL without an appraisal and that appraisal has to be less than what I owe. I currently pay 6.25% so I stand to save at least $200-$300/month if I can find someone to refi my VA loan. I have never had a missed payment, however it is very difficult to find someone who is licensed to write mortgages in the state of Wyoming. Do you have any leads or suggestions. Much appreciated.

  • Carlos C

    Joe, I'm in the process of refinancing my house via an IRRRL. Once the process is finalized, I plan on renting the house. Am I eligible to purchase a bigger house with my VA? I have taken custody of my 3 children and my 18 daughter will come live with me while she attends college.

  • Mike

    I recently closed on a home using a VA loan. One week after closing and three weeks before we were scheduled to move into the home, my orders were revoked. Is there any way to appeal the occupancy requirement? We plan on retiring in this home in 2-3 years and don't want to sell it.

  • Irin Smith

    Just approved for VA home loan. The property has two separate, fully functional homes on the lot. Is it possible to rent out one of the home while I live in the other home. (Arizona). Thanks for any thoughts.

  • irin smith

    Feeling discouraged. We love the home (with 2 separate residences on property). The seller accepted our offer. It is a foreclosure. The house has been vandalized. The stove top, refrigerator, one of the two toilets taken, as well as a bathroom vanity. The utility sink in a laundry room also was ripped from the wall. The copper pipe are capped off so inspection on the water was not able to be completed. We paid for an inspection and found out that the main house airconditioner was blowing air but not cooling. Inspector thought it may be the compressor. This will not pass VA appraisal I am afraid. We asked the seller to repair the things but they requested a VA inspection first. Confused. That is about $450 dollars. Then the seller could say they will not repair. Or, the seller could repair all and then we have to pay for a second VA appraisal. What exactly would a VA appraiser want? there are two houses, one is fully functional and no issues. We are going to up the anty and raise offer and ask the seller to complete repairs BEFORE the VA appraisal. Thanks for your time and thoughts. This is a very disappointing situation since we have been trying to get everthing together for a few years. (and trying to get into a house on a shoestring budget).

  • Bridget

    Hi Joe, I have a somewhat related question. My husband and I currently have a VA mortgage for our home. Which we have lived in for almost five years. We are considering the possibility of moving our family in with and assisting an elderly relative for an indefinite amount of time. The relative's home is fully paid for so we would not be required to pay rent. We have been planning to put our current house back on the market (tried a year ago with almost no interest as we owe too much to sell it for cheaper but property values in our neighborhood have dropped considerably since we bought it). We have a person who would be interested in renting our home while it is for sale or at least while we are living with our relative. Is this a situation that is at all feasible with our current loan? Should we look in to refinancing with the IRRRL? If our home technique lay still remains our legal address could we let just a bedroom of our home to the tenant? Wondering what my first step should be and who I should contact to pursue any possibilities further. Thanks in advance for your help!

  • dave

    many comments about occupancy - what is the PENALTY for not occupying the home and decided after closing to rent it?

  • wes

    Joe you keep referencing the article where it says "intend to occupy" the home. I bought my home and "intended to occupy" it as I have done for nearly two years. I am getting a new job and moving and will take a huge financial loss if I try to sell right now. Why can't I rent it out if I bought the property with the intent of occupying it? By the policy I am not in violation of anything; sounds more or less like the VA tied their hands with their own beuracratic lingo.

  • Greg

    Started a VA refi on my current home 6 mos. ago. Just got the loan to upgrade my home. During the time slot, I got married and need a larger home. Is it possible for me to rent out my VA home and purchase a larger home that has room enough for my new family?

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