Can You Rent a Home with a VA Loan? A Comprehensive Guide for 2023

As a veteran, you’re entitled to use a VA home loan to buy a house as long as you’ve fulfilled the basic requirements. While most people tend to live in the homes they buy for years, sometimes, you may not be able to. When this happens, you’ll likely feel tempted to start renting the property out to another tenant. So, can you? Here’s what you need to understand about VA loan requirements and how they influence your ability to rent out your home.

Purchasing a home is a major milestone for many people For military servicemembers and veterans, VA home loans offer a great opportunity to buy a house with little or no down payment But what if you want to use the home as a rental property instead of living in it yourself? Can you rent out a home purchased with a VA loan? Let’s dive into the details.

VA Loan Basics

First let’s quickly review what VA loans are all about. VA loans are mortgage loans guaranteed by the Department of Veterans Affairs. They allow eligible borrowers to purchase a home without a down payment and often at a lower interest rate than conventional loans.

To be eligible you must be an active duty servicemember veteran, reserves/National Guard member, or qualifying surviving spouse. You also need to meet service length requirements, which vary based on when you served. VA loans can be used for purchases, refinances, and cash-out refinances of primary residences.

Occupancy Requirements

Here’s where things get tricky with renting out VA loan homes. VA loans have occupancy requirements. This means you as the borrower must intend to occupy the home as your primary residence.

Specifically, VA guidelines state that you must:

  • Occupy the home within 60 days of closing
  • Use the home as your primary residence for at least 12 months

You cannot purchase a home with a VA loan if you plan to immediately turn it into a rental property. The home must be your primary residence first before renting it out.

Exceptions

There are a couple exceptions to the occupancy rules:

  • Multi-unit properties: If you purchase a 2-4 unit property, you can rent out the other units immediately as long as you live in one of the units.

  • Change of circumstances: Life happens. If you move out of the home within a year due to unforeseen circumstances like a job relocation, VA may grant an exception.

As long as you meet one of these exceptions, you can rent out the home without needing to refinance into a conventional loan.

Refinancing Options

If you already have a VA loan on a property that you want to rent out, you have a few refinancing options:

  • VA streamline refinance: Also called an IRRRL, this option lets you refinance your current VA loan into a new VA loan at lower rates/payments without an appraisal or credit check. The catch is that streamlines do have occupancy requirements unless you are refinancing multiple units.

  • VA cash-out refinance: Gives you the option to tap equity by refinancing into a higher loan amount. You can use the cash for anything. Cash-outs do have a 12 month occupancy requirement.

  • Conventional refinance: You can refinance into a conventional investment property loan, which does not have occupancy rules. However, you lose the VA loan benefit and will need to pay for private mortgage insurance.

Tips for Renting Out a VA Home

If you meet the requirements to rent out a VA home, keep these tips in mind:

  • Inform your lender once you start renting out the property, as they may need to update insurance or take other steps.

  • Screen tenants thoroughly with credit/background checks to minimize risks. Require renters insurance too.

  • Consult a tax pro – rental income is taxable and there may be relevant deductions you can take.

  • Set aside funds for maintenance and repairs that crop up with rentals.

  • Review local landlord-tenant laws so you know your rights and responsibilities.

The Bottom Line

While VA loans do have occupancy requirements, there are still paths for renting out properties purchased with VA financing. The keys are to live in the home as your primary residence for a year first and understand all the rules and implications involved. As with any major financial move, be sure to consult real estate and legal professionals to ensure you make informed choices. With the right preparations, renting out a VA home can provide solid returns.

You’re Expected to Live In the House

When you buy a house with a VA home loan, you’re expected to use that house as your primary residence. Further, you must move into the home within 60 days after closing on the property unless you receive an extension from the VA.

This is known as the occupancy requirement. If you’re using the loan to buy a house that you plan to live in as your primary residence, you’ll be in good shape. If you’re looking to buy a house explicitly to rent it to a tenant, you’ll need to apply for a traditional mortgage.

The occupancy requirement is a hard and fast component of the VA loan requirements you agree to by accepting the loan. However, the VA doesn’t expect you to live in that house forever. You just have to prove that you used it as a primary residence for a set period of time.

Most VA home loan agreements stipulate that you occupy the house for at least 12 months. At the end of that 12 months, you’ll likely be able to rent the house to a tenant, even if they’re not affiliated with the military.

The only way you can rent out a property immediately after buying it is to buy a multi-family property or duplex. You must live in one of the units and use it as your primary address, but you’re free to rent out the other units to tenants as you see fit.

VA Loan Secrets: What Veterans MUST Know about Using Multiple VA Loans (updated 2023)

FAQ

Can you use a VA loan for rental property?

If you happen to have a property big enough for you to rent out a bedroom or even a guest house, you can always do this to earn some rental income on the side. As long as the property is your primary residence, how you rent out your rooms is up to you, and you can use a VA loan to fund the purchase of the property.

How long do you have to wait to rent a house with a VA loan?

VA lenders need to prove that you plan to use your VA loan to purchase a home as your primary residence, so you must agree to occupy the house yourself for at least 12 months. After that, you can rent out your current home without having to refinance.

Can I put my house on Airbnb if I have a VA loan?

VA Loan Occupancy Requirements The VA will only back home loans that Veterans intend to use as their primary residence. This means the property cannot be used as a rental property, vacation home, timeshare or Airbnb.

How long do I have to live in a VA loan home before selling?

With VA mortgages, you can technically sell the home whenever you want. The VA has no requirements when it comes to the timeframe of selling the home. Your lender may prefer you to stay in the home for at least a year, but you can sell before that time period with a legitimate reason such as a PCS.

Can I rent a house with a VA loan?

Yes. If you have a VA-financed home and you’ve used it as a primary residence for at least a year, you could convert the home into a rental house. You could also buy a second home using another VA mortgage if you agree to use the new home as your primary residence. When can I rent my house with a VA loan?

Who can rent out a home with a VA mortgage?

You must meet specific requirements – including occupancy requirements – to legally rent out a home you purchased with a VA mortgage loan. Veterans and current active-duty, National Guard and reserve military members who meet time-in-service requirements can use the VA home loan benefit.

Can you buy a house with a VA loan?

No, a VA loan is intended to finance a primary residence and cannot be used to purchase rental property, investment property, a vacation home, or a second home. When can I rent my house with a VA loan?

Can military members rent out a home with a VA loan?

Upon first glance, VA loan regulations appear to prohibit renting, but there are ways you can rent out your VA loan-financed property. Can Military Members Buy and Rent Out a Home with a VA Loan? You must meet specific requirements – including occupancy requirements – to legally rent out a home you purchased with a VA mortgage loan.

Can you rent a house if you live in a VA home?

However, simply living in the home for a full year to meet the occupancy rules — or asking the VA to grant an exception — will also enable you to rent. It may reduce your entitlement. The VA no longer imposes loan limits on first-time VA loans but limits will apply to subsequent uses of the VA mortgage loan benefit.

Do veterans qualify for a VA home loan?

Most veterans say that some of the more confusing aspects of qualifying for a VA home loan are the occupancy requirements. This usually stems from when a service member gets their PCS orders and has to move. Will they be able to rent the house? Will they be able to get a second VA loan at their new location?

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