VA Loan Reader Questions: Buying Another Home With A VA Home Loan
A reader asked us recently, “I have a house in NY. I purchased 1999 thru the VA loan process. In 2009 I tranferred to NC. I was unable to sell my house so I made it a rental property. I have been renting a house NC for years. Now I Want to buy the house i am renting using the VA home loan process. NC is now my primary resident not NY. Can I obtain another VA home loan for this new property in NC? If not can the VA loan eligibility be transfer for the new purchase in NC, my primary home.”
We revisited this question and put in a call to the VA Regional Loan Center in Cleveland, Ohio to get some clarification on VA policy about its rules for occupancy. In the VA Lender’s Handbook, Chapter Three, we find the following:
“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.”
Furthermore, “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.”
Based on the reading of these rules, it would be reasonable to conclude that the VA requires the borrower to maintain occupancy in the home purchased with a VA mortgage loan as the primary residence on a continuous basis. However, according to the Cleveland Regional Loan Center, the VA law of Occupancy is specific to the borrower’s intent and actual occupancy at closing time and beyond the closing date of the loan and after the borrower takes occupancy, the VA considers the occupancy rule to have been met.
This would permit the borrower to apply for another VA loan using any remaining entitlement or bonus entitlement offered by the VA (assuming the borrower otherwise qualifies for the VA home loan).
Do you have questions about VA home loans? Ask us in the comments section.