What are the VA IRRRL Occupancy Requirements


Most veterans know that their VA home loan benefit is for an owner-occupied property only. But what happens when you refinance the loan? Do you still have to certify that you intend to occupy the property as your primary residence?

It might seem strange, but you don’t have to live in the home that you refinance with the VA IRRRL. The VA doesn’t have the same occupancy requirements for this program as they do with the VA purchase loan.

The VA IRRRL Occupancy Requirements

You only have to verify one thing when it comes to the occupancy of the home when you refinance with the VA IRRRL. You have to verify that you previously occupied the property as your primary residence. This satisfies the VA’s requirement of owner occupancy.

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The VA recognizes that life changes. You cannot predict what you will do in the future. Maybe your family size will grow and you will outgrow your home. Maybe the military or your civilian job will relocate you and it will be impossible to commute. Each of these situations warrants the right to move. What if you don’t want to sell your home, though? In many cases, you don’t have to sell it.

Watch Your Mortgage Payment History

There are really only two factors the VA requires for the VA IRRRL program. You have to have a timely mortgage payment history. Typically, this means no late payments in the last 12 months. But some lenders grant an exception to this rule. If you’ve had the loan for at least 12 months, they may allow one 30-day late payment in that time as long as you have a good excuse for the late payment.

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The other requirement is the need for a net tangible benefit. This shows the lender that there is a reason for you to refinance. Will the payment decrease? Are you getting a lower interest rate? Are you shortening the term? These are some of the most common benefits veterans obtain when they refinance their VA loan with the IRRRL program.

The Occupancy Doesn’t Matter

The way the VA looks at it is you are probably in a better financial position now than you were when you bought the home if you are able to rent the home out. If you bought another home that you now live in, you have likely used up your VA entitlement. But if you have a timely mortgage payment history, there isn’t much for the VA to worry about.

When you bought the new property, you had to fully verify all of your qualifications so the lender knew that you could afford the loan. No VA lender can approve you for a VA loan if you don’t qualify, so the VA IRRRL program really offers a simple way for lenders to help veterans refinance their loan and reap the savings.

If you don’t live in your home but want to refinance, it’s simple. Just as long as you have a timely mortgage payment history and you are refinancing for good reason (lower monthly payment or interest rate). Don’t needlessly refinance because it does cost money each time you refinance, but take advantage of the benefit if opportunity knocks.

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