Renting out a VA backed home

9 Replies

So I used the VA loan to by my primary residence which I am living in now, I was on the ebenifits site and it stated you had to occupy the residence as your primary residence. No further information was provided, however my mortgage contract states that my lender is requiring me to live in the home for 12 months. I plan on renting this house out once I reach month 13 and then getting another home using a conventional loan (trying to save the rest of my entitlement for my personal home). I just want to be sure that I can leave the home and rent it out at the 13 month mark and if anyone has done this before could you please explain the process. Just to be clear I am not PCSing yet and the new home I would move to would be in the same city as my Current home.

I am currently going through the same process you are and as long as in your loan contract, it clearly states that you only have to occupy that home as your primary residence for 12 months then you are good.  I am going to contact the bank that services my mortgage for that house and ensure they understand what I am doing, just for transparency (and because this is my first long-term rental).  One note is to make sure you contact the company that manages your home insurance and tell them you are going to rent out your home as it will change your insurance policy slightly.

I did exactly what you are posting about back in 2014. It wasn't my initial plan but I had no issues moving after 13 months. I'm not sure what your interest rate is but pay attention to your mail. You should receive notices from your lender with the opportunity to take advantage of the Veterans Administration Interest Rate Reduction Refinance Loan (VAIRRRL) program. It's basically a cost-free opportunity to refinance to a lower interest rate which could help increase your profit margin. I successfully did it twice.

@Rousner E. your plan is good to me.  A common strategy that a lot of us vets have used is buying a duplex, renting one half, collecting our BAH on the other half.  Depending on your area duplexes might be in short supply but it'a an idea to think about.  Good luck!

@Rousner E. don't worry, nobody from the bank is going to come looking in the window at night to see if you are in there. I hope you are buying distressed property below market value. If you are paying market prices for these homes, you are not going to make any money after the mortgage is paid. Keep in mind, the less you borrow, the better the cash flow. The rent doesn't increase just because you overpaid. 

@Rousner E.

So here's the BLUF: you can rent or sell your VA home at ANY time without any penalty. The 12 month is just a formality, not a requirement.

Hey man, don't even worry about that 12 month clause. It's more of a formality than anything else. The VA, and bank for the matter, have no control or regulation of when you can sell or rent your home. Not many people know this because of the verbage used. At closing, you just have to have the "intent" to occupy the home. After closing, a lot can happen and the VA recognizes that. Therefore, there is NO penalty for selling or renting your home at ANY time after purchasing your home. I also have a VA loan for my primary home and verified all this information with the bank, VA, and title company.

Bear in mind you will need to be careful when you use the "rest of your entitlement" the VA backs loans meant to be your primary residence. You may need to dispose of a property, you can only do two VA backed homes at a time. If you pay one off you can quit deed it into an LLC and presto your VA backed loans are available again.

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