VA (Veterans Administration) loans are a way for veterans to get a great loan on a house in return for their service. These loans don't require a down payment, mortgage insurance (PMI) and typically have competitive interest rates. Active duty military, veterans, reservists and National Guard all qualify for the VA loan. There are occupancy requirements that must be met in order to get a VA loan.
- The borrower must intend to live in the house. VA loans are meant to be for homes that will be the primary residence of the military member. A VA loan can't be taken out for an investment or vacation property.
- The borrower has 60 days to take ownership of the house after the loan is approved. After the loan is approved, they have 2 months to move into the house. There can be exceptions made for unique situations, and even then the time is typically not extended for more than a year.
- Time to occupy may be extended if repairs must be done. If there are extensive repairs that need to be done, the borrower may get an extension. If an extension is granted, there must be a date given of when they will be moving in.
- Time to occupy may be extended if the borrower is retiring. If the military member is planning to retire and live in the home, but is still serving elsewhere, an extension can be granted. A copy of the application for retirement and a move-in date is necessary in this situation.
- The spouse can live in the house if the military member is unable to immediately. If a military member is deployed or can prove they are stationed elsewhere for a period of time, the spouse can occupy the house with the VA loan. However, if at the time of the loan the borrower and spouse are known to be living separately, the costs of both residences will be factored in to see if they qualify for the loan.
- Intermittent occupancy can still qualify for a VA loan in some situations. If the service member will be away for long periods of time they may still be able to get a VA loan. They must have a history of living in the area and there should be no indication that they will be residing permanently elsewhere.
Occupancy Requirements and VA Refinancing
Refinancing does not come with as strict of occupancy restrictions as obtaining an original VA loan. If the borrower has lived in the house for a period of time, they are eligible to refinance and won't have as many hoops to jump through to prove occupancy since they have already been living there. After refinancing, a borrower is more likely to get away with renting or not occupying the home as their primary residence.
Even with the occupancy restrictions, a service member who has the intention of living in the home is getting a great deal with a VA loan. There are no other loans available that require no down payment and no PMI. Failure to meet occupancy requirements will result in the Department of Veteran Affairs getting involved.