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VA IRRRL and Cash-Out Refinance Occupancy Guidelines

When purchasing a home with a VA loan, the VA requires the borrower to occupy the house as their primary residence. However, that's not always the case with VA refinancing. Occupancy guidelines for VA refinance loans vary depending on the loan type.

Below we dive into the differences in occupancy requirements for the VA Streamline refinance, or IRRRL, and the VA cash-out refinance.

Comparing the Different VA Refinance Loans

Occupancy requirements differ based on the type of refinance you're using. As a quick primer, the two primary options for VA refinancing are the VA IRRRL and VA cash-out.

With an IRRRL, you're refinancing one VA loan to another VA loan, typically to get a better rate and lower payment. With the VA cash-out, you're either taking cash out from your home's equity or refinancing a non-VA loan to a VA loan.

IRRRL Occupancy Requirements

Veterans using a VA Streamline, or IRRRL, are not required to occupy the property. With the IRRRL, the VA only requires the borrower to certify the home was previously the primary residence.

So for those wondering if you can get an IRRRL for an investment property, the answer is it's absolutely possible. The IRRRL is the only VA refinance product allowing you to refinance a home that's no longer your primary residence.

Cash-Out Occupancy Requirements

Unlike the IRRRL, Veterans using a VA cash-out must occupy the property or continue to occupy the property for the foreseeable future.

The VA cash-out is very similar to VA purchase loans. While there's no set rule from the VA, you typically have to intend to continue occupying the property for the next 12 months.

Depending on service and deployment status, it's not uncommon for a spouse to fulfill this requirement if needed.

So if you're considering using a cash-out refinance on an investment property, the only possible scenario is if you use the VA cash-out on a multi-family home, such as a duplex, where you occupy at least one of the units.

For specific questions on the VA IRRRL and cash-out refinancing, it's best to talk to an experienced lender.