Paycheck Chronicles

From The Mailbag: VA Loan Occupancy Requirements

Home loans guaranteed by the Department of Veterans Affairs (VA), commonly called VA loans, are a valuable benefit of military service. Like all loans, there are rules that must be followed. One of the most confusing parts of the VA home loan program is the occupancy requirement.

Dear Kate,

We bought a house using a VA loan. Now we are moving. Are we allowed to rent it out? My friends are telling me that I'll get in trouble because we haven't lived in the house for a full year.  We can't afford to sell it because we owe too much money - we'd have to bring a lot of money to closing to sell the house.  I'm confused and worried!

Thanks, Mitch

I have literally been in groups where people are arguing about this subject, and everyone is sure they are right. The interesting thing is that there is no inviolable amount of time that you must occupy the property, so no one is actually "right."

Dear Mitch,

The VA does require that the property be purchased with the intent of being your principal residence. There are guidelines for how the VA would determine your intent, but they are just guidelines, not inflexible rules. Generally speaking, if you receive Permanent Change of Station (PCS) orders after you have moved it, the intent portion has been fulfilled.

If you're in a less obvious situation, such as you've only lived in the house two weeks, or you are moving down the street,  I encourage you to reach you to your regional VA service center to discuss your specifics with them.  The VA is remarkably flexible, and their mission is to help veterans.  While the physical bureaucracy is awful, the program and people themselves are generally quite helpful in finding solutions to homeowner's problems.

Call the VA and explain your situation.  They will be able to give you good guidance.

Thanks for writing in,

Kate

It's important that folks understand that a VA loan means you intend to occupy the property.  But don't be overly worried if your situation legitimately changes.  Talk to the VA and find out how to proceed.

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