Servicemembers on active duty overseas or military families who have been given PCS orders may find themselves in a situation where they would like to rent out their home purchased with a VA loan.
As an eligible borrower, once you sign the VA mortgage papers, you are certifying that you intend to use the property as your primary residence. By entering into that contract, you must satisfy this requirement when the loan is closed or within a reasonable time following the closing of the loan, according to the U.S. Department of Veterans Affairs.
So what exactly constitutes primary residence? VA states that the occupant does not need to maintain a physical presence in the house on a daily basis but that it is necessary for the home to be located within a reasonable distance to his or her place of employment. And if the veteran’s employment requires traveling, he or she must show a history of continuous residence in the community and there must be no indication that the veteran has either established or plans to establish an additional residence.
However, there is a way for a veteran to rent out a property. He or she may purchase a multi-unit residence and live in one of the units while renting the others. In addition, a VA refinance loan has different occupancy guidelines than a purchase loan. A veteran with a current VA home loan could use a VA Streamline loan to refinance, which may open up the option to rent out the property.