VA borrowers are expected to live in the properties they purchase.
Sounds like a novel concept, right? But the issue of occupancy is important, not to mention often confusing, especially for first-time home buyers.
These flexible, government-backed homes can’t be used to purchase investment properties or vacation homes. VA loans are for primary residences, so much so that the agency has developed occupancy requirements to ensure homeownership is the ultimate end.
Veterans and active duty personnel who secure a VA loan have to certify that they intend to personally occupy the property as a primary residence. Essentially, home buyers have 60 days, which the agency considers a “reasonable time,” to occupy the home after the loan closes.
But some buyers may find that two months isn’t enough time. The VA does allow homeowners in certain situations to go beyond that 60-day mark, although occupancy at a date beyond one year is generally unacceptable.
Occupancy rules can be especially important for active duty personnel.
The VA allows for a spouse to fulfill the occupancy requirement for an active duty military member who is deployed or who cannot otherwise live at the property within a reasonable time.
There are also some unique situations where the spouse of a veteran can fulfill the requirement if employment issues are making reasonable occupancy difficult.
But both single and married service members can provide what the VA considers “valid intent” to occupy when they’re deployed from their permanent duty station. This provides a degree of breathing room for homeowners who are still actively serving our nation both at home and abroad.
It’s important to note that VA lenders are required to factor in the cost of a couple’s separate living arrangement. That means any rental costs or other expenses associated with the separate housing situations can be factored into the overall debt-to-income ratio and other key metrics.
There’s also a unique wrinkle for VA Streamline refinance loans. In these cases, veterans only have to certify that they previously occupied the home. So, for example, a veteran who buys a home with a VA loan and then gets transferred overseas can rent out the home and still refinance that existing mortgage based on prior occupancy.
Photo thanks to US Army Africa via Flickr Creative Commons