Fulfilling the Occupancy Requirement for VA Home Loans

Occupancy Scenarios

VA loans help veterans and service members achieve the dream of homeownership. This isn’t a financing vehicle for purchasing investment properties, vacation homes or anything other than your primary residence, be it a single-family home, a condo, a multiunit property or other suitable structure.

To help retain that focus, the VA has occupancy requirements in place that borrowers need to satisfy in order to close on a home loan. Service members and veterans seeking a VA purchase loan must certify that they intend to occupy the home as their primary residence.

VA homebuyers generally need to occupy the home within 60 days of closing. Requirements can differ on VA refinance loans.

Occupancy Scenarios

But two months isn’t always enough time. Some VA homebuyers might not even be in the same country, let alone the same state, as the home they want to purchase.

There are some scenarios and living situations where a VA buyer can purchase a home but not have to occupy it immediately.

Here are a few common situations:

  • Active duty borrower: Your spouse can fulfill occupancy. VA is evaluating applications from same-sex couples on a case-by-case basis.
  • Married civilian borrower working overseas: A spouse can often fulfill occupancy in these situations.
  • Single civilian working overseas: These types of scenarios can present more of a challenge. Borrowers may need to show a lender that they’ll be living in the home for a good portion of the year and have ties to the community. Lenders may also want to know more about how the home will be cared for while you’re gone.
  • Married civilian working in the U.S. and looking to purchase elsewhere in the U.S. for his family: These situations can also be difficult for lenders. Borrowers may need to convince a lender that they’ll be living in the home soon, or that they’re not able to live with their family for reasons outside their control.
  • Single civilian working in the U.S. but looking to purchase elsewhere in the country: Neither the VA nor lenders will typically allow this.

Lenders will often take travel and living expenses into account for borrowers not immediately occupying the home. Those costs can be included in your overall debt-to-income ratio and residual income calculations.

Lenders may have their own guidelines on top of what the VA wants to see.

Occupancy Expectations

Every occupancy scenario is different. Each one will need to be developed in more detail before a lender makes a decision about whether to move forward.

VA lenders will want to know at the outset if there’s even a chance you won’t be occupying the home right after closing. Be as honest and forthright as possible.

Plenty of overseas contractors and active military members close on VA home loans each month. Service members utilizing Power of Attorney during the homebuying process will also want to communicate that fact to lenders as early as possible.

The key when it comes to occupancy is clear communication with your lender and your loan specialist. The VA and lenders share the same goal — helping veterans become homeowners.

Questions about your occupancy situation?

Talk with a Veterans United loan specialist at 800-VA-LOANS.

Photo courtesy Flickr user rwcox123 under a Creative Commons license.