Understand Key VA Loan Occupancy Requirements and Exceptions

In this article...
  • Learn more about VA home loans by reading this article about VA loan occupancy requirements. Find out about special exceptions for renting and retirement.

VA loans offer a variety of benefits, such as low down payments and limited closing costs, but those benefits also come with complex stipulations. VA loan occupancy requirements are in place to ensure that the loan program is used correctly and for the right purpose. Continue reading to learn more about VA loan occupancy requirements and how unique situations like retirement could affect your loan.

VA Loan Occupancy Requirements and Extensions

Before learning about occupancy requirements, it’s important to understand that for a home to qualify for a VA loan, it must be your primary residence. This means a secondary or vacation home won’t be eligible for a VA loan. 

To determine occupancy, the
VA stipulates that the person obtaining the loan uses the property as their primary residence and moves in within a reasonable time frame. According to the VA, a reasonable time is usually 60 days after a loan is closed. If there are extenuating circumstances that prevent you from moving within 60 days, you can obtain an extension by: 

  • Certifying that you will occupy the property on a specific date after closing. 
  • Providing a specific event or reason why you will be moving in at a later date.

The VA generally understands that there may be circumstances beyond your control that prevent you from moving in. Delaying occupancy for reasons such as deployment or home repairs isn't uncommon. However, the VA won't consider an extension if you provide an occupancy date that is more than 12 months after the loan closing. 

These occupancy requirements are true for all VA loans except for Interest Rate Reduction Refinance Loans, or IRRRLs. IRRRLs are used to refinance existing loans and only require that the borrower has previously used the property as their primary residence. 

How Does the VA Verify Occupancy?

The amount of time it takes to satisfy VA loan occupancy requirements is usually 12 months. VA lenders use their best judgment to ensure that a borrower is occupying the property. You should ask your VA lender at closing to clarify what documents you may need to show proof of residency. Some documents commonly used to prove residency include: 

  • Utility bills
  • Pay stubs
  • Bank or credit card statements
  • Driver’s license
  • Motor vehicle registration
  • Social service documents
  • Medical bills

Do VA Loan Occupancy Requirements Change After Retirement?  

The VA normally considers 60 days after closing as a reasonable time frame to move in, but what if you are in the process of building your dream home for retirement? If your retirement date is within 12 months of closing, it should satisfy the occupancy requirements for the move-in date. The home will still need to be your primary residence, and the VA will need proof of retirement eligibility and income requirements from an employer before signing off on your loan. Make sure you have a specific retirement date in mind, as the VA will not accept “within the next few years” or “in the near future” as satisfactory answers. 

VA Loan Occupancy Requirements for Families

If you are on active duty or away from your permanent location, your spouse or dependent child may be able to satisfy occupancy requirements while you’re away. Your spouse may also be able to satisfy the requirement if you are away from home due to distant employment for reasons other than military service. In the case of a dependent child, their attorney or legal guardian will need to sign a Report and Certification of Loan Disbursement form before occupancy requirements can be met. Family occupancy rules may vary from lender to lender. For more information, consult your Regional Loan Center for advice.

Can I Rent My Home if I Have a VA Loan?

If you’ve occupied your home for at least 12 months and met all other occupancy requirements, you should be able to rent it to a tenant. The VA may make an exception and allow you to do so sooner if you have received orders that require relocation before you’ve hit the 12-month mark. 

Another option is to use an IRRRL to refinance your VA loan and then petition the VA to purchase another home with your remaining entitlement. An IRRRL can change the VA loan occupancy requirements and potentially allow you to rent your home sooner. Refinancing with an IRRRL is a complex process and it’s recommended that you consult your lender before attempting to do so.

VA loans may be exclusive to veterans and active-duty personnel, but tenants don’t need to be employed by the military to rent from homeowners with VA loans. This way military members can secure peace of mind and a little extra income by renting while they’re called away for extended periods of time. 

The Importance of VA Loan Occupancy Requirements

Anyone eligible for a VA loan must certify that they personally intend to occupy the home they’re buying. Though the rules may seem tedious, VA loan occupancy requirements help ensure that the program continues to provide housing for America’s service members and veterans. Before you purchase a home using a VA loan, consult your financial advisor, loan broker or real estate agent for expert advice.

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