We've received a great deal of questions lately about VA loan occupancy requirements. There are plenty of myths, rumors, and half-truths floating around about the nature of VA loans and the occupancy requirement. What do VA loan rules actually say about the law on occupancy and what does a future VA borrower need to understand about this very important requirement? VA loan occupancy requirements are described in VA Pamphlet 26-7, Chapter Three, Section Five. Titled, "The Law On Occupancy", this section has the definitive statements borrowers need to know about purchasing and occupying a home with a VA mortgage loan.
According to Chapter Three:
"The law requires a veteran obtaining a VA-guaranteed loan to certify that he or she intends to personally occupy the property as his or her home. As of the date of certification, the veteran must either
- personally live in the property as his or her home, or
- intend, upon completion of the loan and acquisition of the dwelling, to personally move into the property and use it as his or her home within a reasonable time."
According to Chapter three, the requirements listed above are enforceable for "all types of VA-guaranteed loans except IRRRLs. For IRRRLs, the veteran need only certify that he or she previously occupied the property as his or her home. Example: A veteran living in a home purchased with a VA loan is transferred to a duty station overseas. The veteran rents out the home. He/she may refinance the VA loan with an IRRRL based on previous occupancy of the home."
Note that there are no exceptions, mentions of a "one year rule" for occupancy or other clauses that allow a borrower to move out of the property after a specified amount of time. However, VA loan occupancy rules do allow a borrower's immediate family members (spouse, or in certain cases dependent children) to fulfill the occupancy requirement on the borrower's behalf. From Chapter Three, Section Five:
"Occupancy (or intent to occupy) by the spouse or dependent child satisfies the occupancy requirement for a veteran who is on active duty and cannot personally occupy the dwelling within a reasonable time. In the case of a dependent child, the veteran’s attorney-in-fact or legal guardian of the dependent child must make the certification and sign VA Form 26-1820, Report and Certification of Loan Disbursement."
Additionally, "Occupancy by the spouse may also satisfy the requirement if the veteran cannot personally occupy the dwelling within a reasonable time due to distant employment other than military service. In these specific cases, consult your Regional Loan Center (RLC) to determine if this type of occupancy meets VA requirements. Note: The cost of maintaining separate living arrangements should be considered in underwriting the loan. For an IRRRL, a certification that the spouse or dependent child (or children) previously occupied the dwelling as a home will satisfy the requirement."
What about borrowers who are not married? Chapter Five states:
"Single or married servicemembers, while deployed from their permanent duty station, are considered to be in a temporary duty status and able to meet the occupancy requirement. This is true without regard to whether or not a spouse will be available to occupy the property prior to the veteran’s return from deployment."
And finally, Chapter Five adds the following about "intermittent occupancy" as it applies to the VA borrower with a new purchase VA home loan or cash-out refinance loan:
"The veteran need not maintain a physical presence at the property on a daily basis. However, occupancy “as the veteran’s home” implies that the home is located within reasonable proximity of the veteran’s place of employment. If the veteran’s employment requires the veteran’s absence from home a substantial amount of time, the following two conditions must be met:
• the veteran must have a history of continuous residence in the community, and
• there must be no indication that the veteran has established, intends to establish, or may be required to establish, a principal residence elsewhere. Use of the property as a seasonal vacation home does not satisfy the occupancy requirement."
For more information on these rules, contact the VA directly by calling 1-800 827-1000.
Do you have questions about VA loans? Ask us in the comments section.
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