Can I Rent Out My Home With a VA Loan?

The VA loan program helps eligible service members, veterans, and surviving spouses achieve homeownership. This benefit allows for purchasing a home with favorable terms, often without a down payment. A common question among beneficiaries, however, is whether a home financed with a VA loan can later be rented out. The answer involves specific requirements and exceptions related to the loan’s primary purpose.

Understanding VA Loan Occupancy

The fundamental purpose of a VA loan is to provide eligible individuals with a primary residence. This means the borrower must occupy the property as their home. The Department of Veterans Affairs (VA) expects the home to be the borrower’s main address, where they receive mail and spend the majority of their time. This owner-occupancy rule ensures the program supports homeownership rather than investment property acquisition.

Borrowers must move into the property within 60 days of closing the loan. The VA recognizes that military life can be unpredictable, allowing for an extended period, up to 12 months, for occupancy if specific circumstances prevent an immediate move-in. This flexibility ensures service members and veterans are not penalized for factors outside their control.

The intent to occupy the property as a primary residence is a certification made by the borrower at the time of loan application and closing. If a borrower is on active duty, their spouse or a dependent child can fulfill the occupancy requirement. Proper documentation and communication with the lender are important to ensure compliance with VA guidelines.

Conditions for Renting Out Your VA-Financed Home

A home purchased with a VA loan can be rented out under specific conditions, primarily after the initial owner-occupancy requirement has been met. Borrowers are expected to occupy the property for at least 12 months before considering renting it out. Once this period is fulfilled, the property can be rented without needing to refinance the existing VA loan.

Exceptions to the initial occupancy rule exist, particularly for military personnel. If a service member receives Permanent Change of Station (PCS) orders, they may rent out their home even if they haven’t met the 12-month residency requirement. This flexibility accommodates the unique circumstances of military life, ensuring service members are not penalized for relocations mandated by duty. Documentation, such as a copy of the PCS orders, is important when discussing these situations with a lender.

Other reasons may also allow for exceptions to the continuous occupancy rule. These can include job relocation, significant life changes, or situations where extensive repairs are needed before the home is habitable. If a borrower purchases a multi-unit property with a VA loan, they are permitted to rent out the other units immediately, provided they occupy one as their primary residence. These are specific allowances within the VA loan framework, and the primary intent of the loan remains owner-occupancy.

Using Your VA Loan Entitlement for a New Home

A veteran’s VA loan entitlement represents the amount the Department of Veterans Affairs will guarantee to a lender for a VA home loan. This guarantee helps lenders offer favorable terms, often allowing for no down payment. Even if a veteran still owns a home financed with a VA loan and has it rented out, they may use their VA loan benefit again to purchase a new primary residence.

This is possible through “remaining entitlement” or “second-tier entitlement.” If a portion of a veteran’s entitlement is tied up in an existing VA loan, the remaining entitlement can be used for a subsequent purchase. For borrowers with full entitlement, there are no VA loan limits, meaning they can borrow as much as a lender approves without a down payment. However, for those with remaining entitlement, loan limits may apply based on the county where the new property is located.

Full entitlement can be restored in several ways. The most straightforward method is selling the original home and fully repaying the VA loan. Another option is refinancing the existing VA loan into a non-VA product, which frees up the VA entitlement. The VA also offers a “one-time restoration” of entitlement, which allows a veteran to regain their full entitlement even if they still own the property, provided the original VA loan has been paid off. Subsequent restorations require selling the property.