Are you a veteran or active-duty military member looking to purchase a home? The VA loan program may be just what you need to make that dream a reality. While VA loans offer many benefits, one of the most important requirements is proper occupancy of the property. In this article, we will provide you with all the information you need to know about occupancy requirements for VA loans.
What Is a VA Loan?
A VA loan is a mortgage loan program that is specifically designed for veterans and active-duty military members. This loan program is offered by private lenders, including banks and mortgage companies, but is guaranteed by the Department of Veterans Affairs (VA).
One of the key benefits of a VA loan is that it does not require a down payment or private mortgage insurance (PMI). Additionally, VA loans offer competitive interest rates and relaxed credit requirements, making them an attractive option for many veterans and military members.
Who Is Eligible for a VA Loan?
To be eligible for a VA loan, you must meet one of the following criteria:
Criteria |
Description |
|---|---|
Active duty service member |
Served for at least 90 days during wartime, 181 days during peacetime, or 6 years in the National Guard or Reserves |
Veteran |
Honorable discharge after serving at least 90 days during wartime, 181 days during peacetime, or 6 years in the National Guard or Reserves |
Spouse of a deceased service member |
Surviving spouse of a service member who died in the line of duty, or as a result of a service-related disability |
What Are Occupancy Requirements for VA Loans?
Occupancy requirements for VA loans dictate that the borrower must occupy the property as their primary residence. This means that the borrower must live in the home for the majority of the year, and cannot rent it out or use it as a vacation home.
Primary Residence
As we mentioned, the property must be the borrower’s primary residence. This means that the borrower must have an intention to live in the home for a significant portion of the year. While there is no specific time requirement, lenders will typically look for the borrower to occupy the property for at least 6 months out of the year.
Status Changes
If the borrower’s status changes and they are no longer able to occupy the property as their primary residence, they must notify the lender. The VA recognizes that life circumstances can change, and they have a process in place to allow for changes in occupancy status. This process typically involves refinancing the loan under a different program.
Can You Rent Out a Property Financed with a VA Loan?
While occupancy requirements for VA loans dictate that the borrower must occupy the property as their primary residence, there are some situations where the borrower may be able to rent out the property. However, certain conditions must be met:
Temporary Duty Assignment
If the borrower is required to move away from their primary residence due to a temporary duty assignment, they may be able to rent out the property. However, the assignment must be for a limited period of time, typically no more than 12 months.
Permanent Change of Station
If the borrower receives a permanent change of station (PCS) order, they may be able to rent out the property. However, they must have lived in the property for at least 1 year prior to the PCS order.
Medical Reasons
If the borrower is required to move away from their primary residence due to a medical reason, they may be able to rent out the property. However, this must be approved by the VA, and the borrower must intend to move back into the property when they are able to do so.
FAQs
Can I use a VA loan to purchase investment property?
No, VA loans can only be used to finance a primary residence.
Can I use a VA loan to purchase a vacation home?
No, VA loans can only be used to finance a primary residence.
What happens if I don’t occupy the property as my primary residence?
If you do not occupy the property as your primary residence, you may be in violation of the loan agreement. This can result in the lender calling the loan due and payable immediately.
Can I rent out a room in my primary residence?
Yes, as long as you continue to occupy the property as your primary residence.
What happens if I move out of the property and rent it out?
You may be in violation of the loan agreement, and the lender may call the loan due and payable immediately.
Can I rent out my primary residence if I am deployed?
Yes, if you are deployed and are unable to occupy the property as your primary residence, you may be able to rent it out.
Can I rent out my primary residence if I am on a temporary duty assignment?
Yes, if you are required to move away from your primary residence due to a temporary duty assignment, you may be able to rent it out.
What happens if I am unable to occupy the property as my primary residence due to a permanent change of station?
If you receive a permanent change of station (PCS) order, you may be able to rent out the property. However, you must have lived in the property for at least 1 year prior to the PCS order.
Do I have to notify the lender if I am no longer occupying the property as my primary residence?
Yes, you must notify the lender if you are no longer occupying the property as your primary residence.
What happens if I am no longer able to occupy the property as my primary residence?
If your status changes and you are no longer able to occupy the property as your primary residence, you must notify the lender. The VA recognizes that life circumstances can change, and they have a process in place to allow for changes in occupancy status. This process typically involves refinancing the loan under a different program.
What happens if I sell the property?
If you sell the property, the loan will be paid off from the proceeds of the sale.
Do I have to occupy the property immediately?
No, you do not have to occupy the property immediately. However, you must have an intention to occupy the property as your primary residence within a reasonable time frame.
What happens if I am unable to occupy the property due to an unforeseen circumstance?
If you are unable to occupy the property due to an unforeseen circumstance, you may be able to request a waiver of the occupancy requirement. However, this is subject to approval by the VA.
Conclusion
Occupancy requirements for VA loans are an important factor to consider when applying for a VA loan. It is crucial that borrowers understand these requirements to avoid any potential issues down the line. By following these requirements, borrowers can take advantage of the many benefits that VA loans offer.
If you are a veteran or active-duty military member, we encourage you to speak with a lender today to learn more about VA loans and how they can help you achieve your dream of homeownership.
Disclaimer
The information provided in this article is for general informational purposes only and should not be construed as legal, financial, or tax advice. It is not intended to substitute for the advice of a qualified professional. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the article or the information, products, services, or related graphics contained in the article for any purpose. Any reliance you place on such information is therefore strictly at your own risk.