Can You Rent Out a House With a VA Loan?
Discover when and how you can rent out a home purchased with a VA loan, understanding the rules and how it impacts your future eligibility.
Renting out a house purchased with a VA loan is possible, but specific conditions apply. The VA loan program is designed to help eligible service members, veterans, and surviving spouses achieve homeownership. While the primary purpose of a VA loan is for owner-occupied residences, there are legitimate ways to convert the property into a rental, provided certain requirements are met. Borrowers considering this option must understand these conditions.
Initial Occupancy Requirements
VA loans require the borrower to occupy the property as their primary residence. The home cannot be used as a vacation or investment property from the outset. The VA expects the home to be the borrower’s primary address.
Borrowers must certify their intent to personally occupy the property as their primary residence. Certification is done by signing specific VA forms during the loan application and at closing. Borrowers are generally expected to move into the home within a “reasonable time” after closing, commonly within 60 days.
However, military life can present unpredictable circumstances, leading to exceptions to the 60-day rule. For instance, if a service member is on active duty, deployed, or if the home requires significant repairs, additional time may be granted, up to 12 months from closing. Borrowers must communicate their intent and provide documentation to their lender. A spouse or dependent child can also satisfy the occupancy requirement if the veteran is unable to occupy the home due to service obligations.
Permissible Scenarios for Renting Out
After initial occupancy, several legitimate scenarios permit renting out a VA-financed property. Original intent to occupy the home as a primary residence must be genuine at purchase. The VA loan program supports homeownership, not immediate investment property acquisition.
Relocation due to military orders, such as a Permanent Change of Station (PCS), is a common reason for renting out a VA-financed home. If a veteran receives PCS orders, they can rent out the property without issue, even without a 12-month residency. A significant job change requiring relocation, even for non-military employment, is also a valid reason to rent.
Another scenario involves a reasonable occupancy period. While no strict federal minimum exists, many lenders expect borrowers to reside in the home for at least 12 months before moving out and renting. This reinforces the initial owner-occupancy intent. After this period, if circumstances change, renting is generally permissible.
A VA loan can also purchase a multi-unit property (duplex, triplex, or fourplex). The veteran must occupy one unit as their primary residence. This arrangement allows for immediate income from the property.
Using Your VA Loan Eligibility Again
When a veteran rents out their VA-financed home, questions arise about using their VA loan eligibility for a future home purchase. The VA loan program operates on an “entitlement” system, which is the amount the VA guarantees. This entitlement can be used again under specific conditions.
Full VA loan entitlement can be restored by selling the property and paying off the VA loan. Once the loan is satisfied, full entitlement for that property becomes available for a new VA loan. Another method to free up entitlement is refinancing the existing VA loan into a conventional or other non-VA loan. This removes the VA guarantee, restoring entitlement for future use.
The VA also offers a “one-time restoration” of full entitlement. This option is available if a previous VA loan was paid in full, even if the property was not sold, allowing a veteran to regain full entitlement for another primary residence.
In some situations, a veteran may not have used their full entitlement on a previous loan, leaving “remaining entitlement” or “bonus entitlement.” This remaining portion can sometimes be used to purchase a second home with a VA loan, even if the first VA-financed home is still owned and potentially rented out. The amount of remaining entitlement depends on the original loan amount and total available entitlement.