VA Loan Occupancy Requirements: A Complete Guide

For those who are currently serving in the military, veterans or their eligible spouses, VA loans are a great financing option for purchasing a home. VA loans offer limited closing costs, low or no down payments, no mortgage insurance requirements and lower interest rates. With many lenders offering VA loans to those who qualify, it’s important to both understand and follow the occupancy requirements for the VA loan program. Let’s review VA loan occupancy requirements to see if you meet the prerequisites as a potential borrower.

What Are The VA Loan Occupancy Requirements?

VA loans are mortgages that were designed for those who have served in the military and their eligible spouses. These loans are backed by the U.S. Department of Veterans Affairs (VA) and those who are eligible must follow the loan terms set up by the department. However, the loan itself is issued by private lenders, which can be a bank or a mortgage provider.  

While there are multiple requirements that borrowers must meet to qualify, one of the most important factors is occupancy. VA loans must be used for a primary residence and the owner must move into the new home within 60 days from closing. The VA created occupancy requirements that rule out the possibility of purchasing an investment or vacation property with a VA loan. While there is the chance for adjustments for certain situations, the occupancy requirements are strict for potential borrowers.

Does The VA Check Occupancy?

Lenders who offer VA loans use their best judgement to ensure that the potential borrower intends to use their home as their primary residence. The borrower will need to sign VA forms to satisfy the lender’s duty to secure the veteran’s occupancy certification.

Exceptions To The VA Home Loan Occupancy Requirements

While the VA home loan occupancy requirements are strict, there are exceptions if the new homeowner can’t move into the residence within 60 days of closing. If the borrower cannot occupy it within 60 days of closing, the VA will typically set an occupancy date for less than 12 months after closing and must establish an occupancy date. Here are some exceptions to the 60-day rule that service members may be dealing with when using a VA loan.

Spouse Occupancy

A spouse can fulfill the occupancy requirement if the homeowner is an active-duty service member who is deployed or has a temporary assignment. Since the service member cannot reasonably occupy the house during this time, the VA will allow the spouse to step in as the occupant within the 60-day mark.

Dependent Occupancy

Like a spouse, a dependent child can also satisfy the occupancy requirement if the homeowner is an active-duty service member who cannot reasonably occupy the house during deployment. If it’s a dependent child, the homeowner’s attorney-in-fact or the child’s legal guardian must sign the VA Form 26-1820, Report and Certification of Loan Disbursement.

Delayed Occupancy

If there is a situation that might delay moving into the residence within the 60-day limit, like active duty or necessary home repairs, the VA may allow homeowners to move in later. An arrangement may be made between the lender and homeowner to make improvements to the home to meet Minimum Property Requirements, or MPRS.

Intermittent Occupancy

With the nature of the job, a military service member’s time at home could be interrupted by deployment or even temporary assignments. Intermittent occupancy is allowed under certain circumstances if the homeowner can prove that the property is used as the primary residence and it’s not a second home, the homeowner hasn’t and doesn’t intend to move and they have lived at the home continuously in the past.

Retirement Occupancy

A new homeowner can still qualify for a delayed occupancy if they plan to move after they retire. So, if you plan on retiring within the 12 months after applying for a VA loan, it’s possible to obtain a later move-in date. To do this, the retiring veteran must present a copy of the retirement application and prove that the retirement income can cover the monthly mortgage payments.

Rental Occupancy

Lastly, a homeowner can decide to rent the property if they have already resided there for 12 months or were assigned somewhere else before the year ends. Note that the tenant does not have to be a service member to live in the home. It’s best to speak with your lender before renting out the home.

VA Loan Occupancy Guidelines For Refinancing

Most refinancing options are not exempt from the VA loan occupancy rules, but some are. Sounds confusing? No need to fret – here are the occupancy guidelines for refinancing a VA loan.

VA Cash-Out Refinance

A VA cash-out refinance does requires the borrower to certify occupancy of the home for the new loan. This type of refinance also requires a new credit check and appraisal.

VA Streamline Refinance Or IRRRL

If a service member has been reassigned to a new station, a VA streamline refinance or interest rate reduction refinance loan (VA IRRRL) might be a good fit. This option helps lower your interest rate but requires the borrower to certify that the home was their primary residence during the original loan.

The Bottom Line

If you or a loved one is considering applying for a VA loan, the program can be extremely helpful for those who have or are serving our country and starting home buying journey. Understanding the occupancy requirements that come with VA loans can help the mortgage application process and eliminate any confusion later.

During the application process, keep in mind when you’ll be required to move into the new home and how long you’ll need to live there before selling or renting. There are accommodations for special situations, like retirement or deployment, that would allow you to begin occupying the home past the 60-day mark.

Learn more about applying for a VA loan with bad credit and other home buying and refinancing tips in our Rocket Homes Learning Center.