Eleanor Finch
VA loans are a great benefit for veterans and active-duty military, but they come with a set of requirements that must be met to maintain eligibility. One of the most important requirements is that the loan is used for a primary residence, meaning that borrowers are expected to live in the property they purchase. This is to ensure that the loan is used for its intended purpose and not for a vacation home or investment property. While there is no set time for occupancy, borrowers are generally expected to occupy the property within 60 days of closing the loan, and reside there for at least 12 months. There are exceptions to this rule, such as intermittent occupancy due to employment or deployment, and the VA and lenders may offer flexibility for unique circumstances.
| Characteristics | Values |
|---|---|
| Occupancy | The borrower must occupy the property as their primary residence within 60 days of closing the loan. |
| Intent to occupy | The borrower must certify that they intend to occupy the property as their primary residence. |
| Spouse/dependent occupancy | A spouse or dependent child may satisfy the occupancy requirement if the veteran is unable to personally occupy the home due to active duty, long-distance employment issues, or other reasons. |
| Retirement | Retiring veterans must include a copy of their retirement application and prove sufficient income to maintain the loan. |
| Refinancing | For a VA cash-out refinance, borrowers must demonstrate that the refinanced property will serve as their primary residence. |
| Co-borrowers | All co-borrowers must reside in the property and use it as their primary residence. |
| Seasonal/vacation homes | Using a VA-backed property as a seasonal or vacation residence is not permitted. |
| Investment properties | VA loans cannot be used to purchase investment properties or second homes, except in certain circumstances. |
| Exceptions | The VA offers exceptions to the occupancy requirement, such as the intermittent occupancy exception or the rental occupancy exception. |
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What You'll Learn
The 60-day rule
However, it's important to note that this rule is not set in stone, and there are exceptions and extensions available under certain circumstances. For example, if you are an active-duty service member or preparing to separate from service, you may find that two months is not enough time to occupy the property. In such cases, the VA allows homeowners to request an extension beyond the 60-day mark.
To qualify for a waiver of the 60-day rule, you must meet certain conditions. Firstly, you need to certify that you will occupy the property at a specific date after your VA loan closes. Secondly, there must be a specific event in the future that will enable you to occupy the property on that date. It's important to note that the VA typically does not grant exceptions if you want to set an occupancy date for more than 12 months after your loan closes.
If you are planning to retire within 12 months of applying for your VA loan, you may be able to negotiate a later move-in date. In this case, you will need to provide a copy of your retirement application and demonstrate that your retirement income will be sufficient to maintain the home loan. Additionally, if you intend to make significant repairs or improvements to meet Minimum Property Requirements (MPRs), the VA may allow you to occupy the home after the completion of those repairs, provided you certify your intent to occupy the property upon completion.
It's worth mentioning that the VA loan program is designed for primary residences. VA loans are not intended for purchasing vacation homes or investment properties. Therefore, the 60-day rule and its exceptions are in place to ensure that borrowers use the loan for its intended purpose of homeownership.
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Extensions and exceptions
The VA loan program offers some flexibility and exceptions to the primary residence requirement. Here are some key points to note:
- Extensions: While the standard timeline for occupying a VA-backed home is within 60 days after finalizing the loan, the VA allows extensions in certain circumstances. For example, if imminent repairs or renovations delay the move-in date, this deviation can be labelled as a "delay". In such cases, the mortgage lender may request additional documentation to address the postponement.
- Intermittent occupancy: The VA allows intermittent occupancy due to employment as long as the borrower has a history of continuous residence in the community and there is no indication of a primary residence established elsewhere.
- Active duty and deployment: Active duty service members who are deployed to a different location may be eligible for a waiver of the occupancy requirement. The VA considers a service member deployed from their permanent duty station as occupying the home as long as they intend to return.
- Spouses and dependents: The occupancy requirement can be satisfied by the veteran's spouse or dependent child living in the home while the veteran is on active duty or otherwise unable to occupy the home. However, many lenders will not recognize dependent occupancy as meeting the requirement.
- Retirees: Retiring veterans can apply for a VA loan while intending to retire within 12 months of obtaining the loan. They must provide a copy of their retirement application and prove that they will generate sufficient income to keep up with mortgage payments.
- Hardship waivers: In cases of hardship, such as job loss or medical emergency, borrowers may be able to request a waiver of the occupancy requirement.
- Surviving spouses: The VA and lenders may accommodate surviving spouses of veterans who passed away in the line of duty or from a service-related disability, allowing them to use the VA loan benefit without occupying the property.
It is important to note that the VA does not provide specific guidelines for all these scenarios, and borrowers should consult with their lender to discuss their specific circumstances.
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Primary residence defined
To qualify for a VA loan, the property must be the borrower's primary residence. This means that the borrower must intend to occupy the property as their main home and not use it as a secondary residence or for investment purposes. The VA loan program is designed to assist veterans and their immediate families in securing and maintaining homeownership.
The VA requires that borrowers move into the home within a "reasonable time" after the loan closes, which is typically expected to be within 60 days. However, this timeline may be extended in certain circumstances, such as when borrowers are on active duty or facing unique challenges. The VA also offers some flexibility for retirees, who must intend to retire within 12 months of obtaining a VA loan and provide proof of sufficient income to maintain the loan.
To satisfy the occupancy requirement, the borrower must certify their intention to occupy the property as their primary residence. This can be done by providing a letter or signing mortgage documents indicating their plans to live in the home for at least 12 months. The VA also allows for intermittent occupancy due to employment as long as the borrower has a history of continuous residence in the community and there is no indication of a primary residence established elsewhere.
It's important to note that VA loans are not intended for purchasing vacation homes or investment properties. The property purchased with a VA loan must be where the borrower primarily lives. If a borrower fails to occupy the property within a reasonable time, they may be required to pay back the entire loan.
While the VA does not provide specific guidelines, it is recommended that lenders be involved in the discussion if the borrower's intention is outside of the norm. The VA loan occupancy requirements offer flexibility for families of veterans or active service members, and there are exceptions in place to accommodate spouses, dependents, and active-duty service members.
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Co-borrowers
When it comes to co-borrowers, the VA loan program has specific requirements that must be met. Firstly, it is essential to understand that the VA loan residency requirements are crucial for maintaining eligibility for a VA home loan. The VA loan program aims to assist veterans and their immediate families in achieving and sustaining homeownership.
In the context of co-borrowers, if another veteran is involved as a co-borrower, there is a critical mandate that they must reside in the property. This means that all individuals co-borrowing under the VA loan program are required to actively use the home as their primary residence. This requirement aligns with the program's goal of promoting homeownership for veterans and their families.
The definition of a primary residence is legally recognised as the main home an individual resides in for most of the year. It is important to note that only one property can be designated as an individual's primary residence at any given time. This designation is typically evidenced by the address on official documents such as a driver's license, tax returns, and other government records.
To satisfy the VA loan residency requirements, co-borrowers should be prepared to provide necessary documentation and explicitly state their intention to make the property their primary residence. This involves working closely with the lender to ensure compliance with their specific guidelines, as they may have additional requirements beyond those mandated by the VA.
While there is flexibility in certain circumstances, such as allowing for intermittent occupancy due to employment, the emphasis on co-borrowers actively using the property as their primary residence remains a key aspect of the VA loan program's occupancy requirements.
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Active duty and deployment
Active-duty service members are eligible for VA loans and can use this benefit to buy a home while they are still serving. To be eligible, active-duty members must meet at least one of the following requirements:
- Serve at least 90 consecutive days on active duty during wartime
- 90 days of non-training active-duty service
- 6 creditable years in the National Guard, and continue to serve
- 6 creditable years in the National Guard and be discharged honorably or placed on the retired list
- 6 creditable years in the Selected Reserve, and continue to serve
- 6 creditable years in the Selected Reserve and be discharged honorably or placed on the retired list
Additionally, active-duty members must meet credit, income, and other financial guidelines. Lenders will obtain a copy of the service member's Leave and Earnings Statement (LES) to understand their income. It is important to note that lenders must identify service members within 12 months of their release from active duty or the end of their contract term. If not reenlisting, the service member must provide a valid civilian job offer, including a start date and pay.
If you are on active duty and are unable to personally occupy your home, your spouse or dependent child may satisfy the occupancy requirement. In the case of a spouse, they must make an occupancy certification. If a dependent child will occupy the home, an attorney or dependent's legal guardian must make the occupancy certification. However, many lenders will not recognize dependent occupancy as satisfying the VA loan occupancy requirement.
If you are deployed after purchasing your home, your occupancy status is not affected. You are considered to be in a "temporary duty status" and can provide a valid intent to occupy certification. This requirement is met regardless of whether your spouse will be occupying the property while you are deployed.
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Frequently asked questions
The VA loan program requires that the property functions as the buyer's primary residence, excluding the possibility of using it for secondary or investment purposes.
The VA requires that the borrower moves into the home within 60 days after the VA loan closes. This is considered a "reasonable time" and the borrower is expected to occupy the property as their primary residence within this period.
Yes, in certain circumstances, homebuyers may be able to extend their occupancy beyond the 60-day mark, up to a maximum of one year. These exceptions are designed to provide flexibility for veterans facing unique circumstances.
You are expected to live in the property as your primary residence for at least 12 months after occupying it.
No, VA loans are intended for primary residences only. Second homes, vacation homes, and investment properties do not qualify for VA loans.
