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Major Change to VA Occupancy Rules

Updated December 6, 2018

The Department of Veterans Affairs had major policy changes in 2012 due to the passage of the Honoring America's Veterans and Caring for Camp Lejeune Families Act of 2012.

One of those big changes involves the VA loan rules concerning occupancy of the home purchased with a VA guaranteed mortgage or refinanced with a VA cash-out refinancing loan.

According to the old regulations for VA loans, when applying for new purchase VA loans or cash out refinancing, borrowers are required to certify they intend to live on the property secured with a VA loan as their primary residence.

No one is allowed to buy a home with a VA loan without promising in writing that they will take possession of the home "within a reasonable period" and live on the property as the primary residence. Summer homes, time shares or similar intermittent occupancy-type purchases are not permitted under the VA loan program.

Under the law, a VA borrower may have a spouse fulfill the occupancy requirement on their behalf. Before the new VA policy changes, only a spouse was permitted to do this. But thanks to the Honoring America's Veterans and Caring for Camp Lejeune Families Act of 2012, VA loan policy has been changed to allow dependent children of the military member to occupy the home to meet occupancy requirements. However, this additional option is not automatic. The borrower must take action.

According to VA.gov, "The occupancy requirement is also considered met if a dependent child occupies, or will occupy, the property as a home and the Veteran's attorney-in-fact or the dependent child's legal guardian makes the occupancy certification. VA has amended VA Form 26-1820, Report and Certification of Loan Disbursement, to accommodate this change. The form was posted online on October 3, 2012... For any loan closed subsequent to that date, the new VA Form 26-1820 should be used."

An important reminder here: the presence of the dependent in the home does not fill the occupancy requirement without additional action taken by a legal guardian, attorney or attorney-in-fact.

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