When you prepare to apply for a VA home loan, the VA occupancy rule is one of the first things you'll learn about. In order to be approved for a VA mortgage, you must certify you intend to use the home as your primary residence.
The "primary borrower" agrees to start using the home as the primary residence within what the VA calls a "reasonable time," usually two months after closing on the loan or when the house is completed in the case of a custom-built home.
But there are some exceptions and allowances regarding occupancy.
You can apply for an extension on the 60-day requirement if circumstances demand it, but the VA wants veteran and military homeowners occupying the property within 12 months of closing. The occupancy rule applies to all primary borrowers listed on the VA home loan.
Are you a frequent traveler? Do you spend long periods of time away from the home? On a case-by-case basis, VA occupancy rules exercise some flexibility, under the right conditions. The homeowner must not have a primary residence elsewhere, and must show a consistent record of living where the VA home loan was issued. Lenders can and often will take travel costs into account when calculating debt-to-income ratio and other financial requirements.
Borrowers can show continuous residence with utility or other service bills that prove residency within the area of the VA loan financed property. Depending on current legislation or changes to VA regulations, you may be asked to show other proof of residency.
For active duty VA loan borrowers, spouses can fulfill the occupancy requirements for the VA loan if or when the service member is away from home. In fact, it’s easier for married VA loan borrowers to meet occupancy demands because of spouses. Single borrowers who work overseas or plan on purchasing property outside of where they currently live face more scrutiny from lenders.
That doesn’t mean single borrowers are ineligible for VA loans, not at all, but challenges can present themselves if single borrowers have plans to be away from the new property for extended durations.
For service members who apply for a VA loan and plan to retire within 12 months of applying, later move-in dates are a possibility. Lenders will check the retiring service member’s income and employment status to ensure he or she can take on the new mortgage payments.
Moving in later than the VA’s preferred standard of 60 days after closing is suitable and necessary for some VA loan borrowers. Check with your loan officer and VA representative to learn the latest requirements on showing proof of residence, especially if you plan to be away from your new home or face challenges occupying it within 60 days of closing your VA loan.