The VA has occupancy requirements for veteran borrowers, but there are some exceptions to the rules we'll explore below.
VA loans are for primary residences and borrowers are expected to live in the properties they purchase.
To ensure this, the VA developed occupancy requirements that make certain homeownership is the borrower’s intended purpose – essentially ruling out the ability to purchase an investment property or vacation home.
Sounds like a novel concept, right? But the issue of occupancy is important, not to mention often confusing, especially for first-time home buyers.
Typically, homebuyers have 60 days from closing to occupy a home purchased with a VA loan. However, the VA does allow homebuyers in certain situations to go beyond the 60-day mark, potentially extending up to one year.
Veterans and active duty personnel who secure a VA loan have to certify that they intend to personally occupy the property as a primary residence.
Essentially, homebuyers have 60 days, which the VA considers a “reasonable time,” to occupy the home after the loan closes.
But some buyers may find that two months isn’t enough time – especially those on active duty or preparing to separate from service. Fortunately, the VA does allow homeowners in situations like these go beyond that 60-day mark, although occupancy at a date beyond one year is generally unacceptable.
There are a few scenarios and living situations in which a VA buyer can purchase a home and occupy it after the 60-day mark. Still, the VA typically requires service members set an occupancy date for less than 12 months after closing a loan. In addition, service members need to make clear the specific date occupancy will occur and the specific event that will make occupancy possible.
Here are a few common situations in which an extension might be permissible:
If you plan on retiring within 12 months after applying for your VA loan, you might be able to negotiate for a later move-in date. A retiring veteran must include a copy of their application for retirement, and VA lenders will carefully consider if the retiree’s income is sufficient to maintain a home loan.
If you’ve made arrangements with your lender to fix or improve a home in order to meet MPRs, the VA allows you to occupy the home after the repairs have been made. However, you must certify your intent to occupy or reoccupy that property upon completion of the repairs or improvements.
The VA allows for intermittent occupancy due to employment, as long as the borrower has a history of continuous residence in the community and there are no indications of a primary residence established elsewhere. However, use of the property as a seasonal vacation home will not satisfy the occupancy requirements.
If your circumstance doesn’t match one of the above situations, you may submit a description of your particular circumstance to the VA for approval.
While the VA offers these exceptions, lenders also have their own standards that might affect occupancy requirements.
The VA allows for a spouse to fulfill the occupancy requirement for an active duty military member who is deployed or who cannot otherwise live at the property within a reasonable time.
There are also some unique situations where the spouse of a veteran can fulfill the requirement if employment issues are making reasonable occupancy difficult.
But both single and married service members can provide what the VA considers “valid intent” to occupy when they’re deployed from their permanent duty station. This provides a degree of breathing room for homeowners who are still actively serving our nation both at home and abroad.
It’s important to note that VA lenders are required to factor in the cost of a couple’s separate living arrangement. That means any rental costs or expenses associated with the separate housing situations can be factored into the overall debt-to-income ratio.
There’s also a unique wrinkle for VA Streamline refinance loans. In these cases, veterans only have to certify that they previously occupied the home.
For example, a veteran who buys a home with a VA loan and then gets transferred overseas can rent out the home and still refinance that existing mortgage based on prior occupancy.
The last thing you may be asking is, “How long do I have to live in a home purchased with a VA loan?”
The answer is, of course, it really depends. There's no hard and fast rule from the VA, but typically homebuyers will sign documents at closing that say you intend to occupy the home for 12 months after closing.
However, those documents also provide a way out and you may stop occupying, or sell, before the 12 months if it's a legitimate reason and the lender agrees.
VA loans allow Veterans to have a co-borrower on the loan. Here we break down co-borrower requirements and provide common scenarios around co-borrowing and joint VA loans.
Your Certificate of Eligibility (COE) verifies you meet the military service requirements for a VA loan. However, not everyone knows there are multiple ways to obtain your COE – some easier than others.