The VA home loan program was created to help military members and veterans have better access to the housing market. But like most government-backed loan products, VA home loans are focused on the purchase of primary residencies, not vacation and rental properties. Because of that, the VA loan program has occupancy requirements in place for purchase and some refinance loans.
Eligible borrowers who obtain VA loans need to certify that they intend to occupy the purchased property as a primary residence. VA loans cannot be used to finance the purchase of property for business, rental or seasonal vacation purposes. But it’s possible to use this loan to buy a multi-unit property, as long as you intend to live in one of the units.
As of the date of certification, the veteran must either personally live in the property as his or her home, or intend to move into the property and use it as his or her home within 60 days of the loan closing. This two-month moving window is “reasonable time,” according to the VA.
The VA can extend that 60-day window in some cases. Borrowers may want or need more than the 60 days to move in because:
For married active duty service members, a spouse can fill the occupancy requirement. The same can be true for married veterans who are working overseas as contractors or in other capacities.
Things can be more difficult for single civilians working overseas or for married veterans trying to buy a home in another part of the country while staying in the old locale.
Note that lenders will consider a couple’s second living situation when it calculates debt-to-income ratios. Other housing and travel costs can impact your affordability situation and possibly impact your VA loan application.
Those are just a few examples. Occupancy situations are examined on a case-by-case basis, so talk with a VA lender about your particular circumstances.
For Interest Rate Reduction Refinancing Loans (IRRRLs), or VA Streamline loans, the veteran need only certify that he or she previously occupied the property as his or her home. A VA Cash-Out refinance will require the borrower to certify occupancy.
It’s important for every borrower to have a firm grasp of VA occupancy requirements to avoid confusion during the VA loan process.