Can You Rent Out a Home With a VA Loan?

VA loans are a significant benefit for eligible service members, veterans, and surviving spouses, designed to facilitate homeownership. A common question is whether a property acquired with a VA loan can later be rented out. Understanding the specific regulations around VA loan occupancy is important for homeowners.

VA Loan Occupancy Standard

A fundamental aspect of VA loans is the occupancy requirement, stipulating that the property must serve as the borrower’s primary residence. This rule supports homeownership, not investment properties. Borrowers must intend to move into the home within a reasonable timeframe after closing, often cited as 60 days.

Most lenders require a commitment to occupy the property as a primary residence for at least 12 months. Exceptions may exist for active-duty service members or those with specific circumstances, allowing for a delayed move-in, sometimes up to a year.

Renting Out a Section of Your VA Loan Home

Renting out a portion of a property financed with a VA loan is permissible, provided the borrower continues to use the home as their primary residence. This approach aligns with the core occupancy requirement. For example, a homeowner could rent out spare bedrooms, a basement apartment, or a detached accessory dwelling unit. The crucial factor remains that the borrower must reside in the home.

VA loans also allow for the purchase of multi-unit dwellings, such as duplexes, triplexes, or fourplexes. In these cases, the borrower must occupy one of the units as their primary residence. The remaining units can be rented out immediately, offering a potential income stream to help offset mortgage costs. This strategy enables veterans to leverage their benefit for properties that can also generate rental income.

Circumstances Allowing Full Rental of a VA Loan Home

Limited circumstances permit a borrower to rent out their entire VA loan-financed home after satisfying the initial occupancy requirement. Once the initial occupancy period, typically 12 months, has been fulfilled, the borrower generally has more flexibility. This means that if life circumstances change after residing in the home for this period, renting it out can become an option.

One common scenario involves Permanent Change of Station (PCS) orders for military personnel. If a service member receives official orders to relocate to a new duty station, they may be able to rent out their home even before the typical 12-month occupancy period is complete. Similarly, a job relocation that necessitates moving a significant distance can also be a valid reason to rent out the property. The VA loan program is fundamentally designed for primary residences, not investment properties from the outset.

Refinancing for Rental Property Conversion

If a homeowner wishes to rent out their entire VA loan home but does not meet the specific exceptions, refinancing the VA loan into a non-VA loan, such as a conventional loan, is an alternative. This removes the VA’s occupancy restrictions from the property. Refinancing can also free up VA loan entitlement for a future primary residence purchase.

Converting to a conventional loan eliminates the VA funding fee. While conventional loans often have stricter qualification requirements, such as higher credit score thresholds and the potential for private mortgage insurance (PMI) if less than 20% equity is held, they offer flexibility for investment properties. This conversion allows the property to function purely as a rental without the ongoing primary residence obligations of a VA loan.