Can You Buy a Second Home With a VA Loan?

Dawn Papandrea

The U.S. Department of Veterans Affairs offers veterans and active-duty military members a number of benefits, including VA home loans. When you use this benefit, the home must be your primary residence, which means VA loans are generally not available for second homes unless you're moving.

Can you buy a vacation or investment home with a VA loan? The short answer is no.

When you buy a home with a VA loan, you're usually expected to move in shortly after closing -- within 60 days in most cases. That means an investment home you rent out entirely or a vacation home you visit regularly but don't actually live in won't qualify for a VA loan. But there are some situations that allow you to use your VA entitlement to buy an investment or vacation home.

Read on to find out some of the ways in which VA home loans can help you buy a second home.

What Is a VA Home Loan?

VA home loans are issued by private lenders, such as banks and mortgage companies. The VA guarantees 25% of the loan, which allows the lender to offer better terms. With this 25% guarantee, homebuyers can obtain a mortgage with 0% down and no private mortgage insurance.

[Read: Best VA Loans.]

Can I Get a VA Loan if I Already Own a House?

If you already own one home with a VA loan, it is possible to purchase another home using a second VA loan, says Chuck Walden, senior branch manager in the Gwinnett County office of Silverton Mortgage in Georgia.

If you own a house, you can get another VA loan with your full entitlement guarantee if you've paid off the loan for the home you own or refinanced the mortgage to a non-VA loan. If you haven't paid off or refinanced the loan, you can still use a partial entitlement, which offers a limited guarantee.

A typical situation might be if a military member is getting moved from one base or post to another and wants to buy a home in the new area, Walden says.

But there's a big caveat: The home you buy with your new VA mortgage must become your primary residence. That means if you're hoping to use a VA loan for a vacation property or investment, you're out of luck unless you plan to move in full time shortly after closing.

How Long Do You Have to Occupy a VA Loan Home?

A home must be your primary residence when you first make the purchase, which is why you cannot use a VA home loan to purchase a vacation home, even if you plan to visit regularly. "You really need to plan to live in the home you buy full time, not part time," says Michele Hammond, private client home lending advisor for JPMorgan Chase in New York.

To start, the VA requires that you occupy the property within 60 days of purchase, says Walden. At closing, you'll sign a paper agreeing to occupancy. The VA specifies the documentation you will need regarding occupancy.

[Read: Best Mortgage Lenders.]

There are exceptions, but none of them really allow for you to delay occupancy long enough to use a VA loan for an investment or vacation property:

-- Active duty with a spouse or dependent child. A spouse or dependent child can satisfy your occupancy requirement if you're on active duty.

-- Deployment. If you're deployed from your permanent duty station, you're considered on a temporary duty status and able to meet the occupancy requirement.

-- Retirement. Veterans planning to retire within 12 months can purchase a retirement home and occupy it after retirement.

-- Improvement or repair. Delayed occupancy is also permitted for substantial improvements or repairs.

"A lot of times a veteran may be returning from an overseas assignment. The wife or husband can purchase a house where they will be going once they return from overseas. The spouse could go ahead and purchase the house and then the military member can follow after," says Walden.

Ultimately, you will most likely have to occupy the residence within 12 months.

As for how long you're expected to remain in the home once you occupy it, there is no hard and fast rule, says Hammond. Active-duty service members are often moved around, so it could be necessary to sell your VA home not long after you buy it.

Can You Use a VA Loan for Investment Property?

Technically, the answer is no. While you can't use a VA loan to buy a second property that you intend to rent out and earn income on, you could buy a new home that will become your primary residence, then keep your old home to rent out.

"As long as you purchase your property for a primary residence, you don't have to get out of that first loan when you go to buy your next property," says Hammond.

Or you could buy a primary residence and rent out part of it. Hammond points out that the VA home loan program isn't only for single-unit properties. You can use it to buy up to a four-unit residence. For example, you could live in one of the units and rent out the other three. If you eventually want to move, you can still own that property and rent out all of the units.

[Read: Best Mortgage Refinance Lenders.]

Can You Use a VA Loan for Vacation Property?

It's not really possible to use a VA loan for vacation property, as you'd need to move in according to the occupancy requirements. But it could work if you're planning to take a permanent vacation, such as retirement. If you go this route, you'll need concrete plans backed up with documentation.

You can purchase a retirement home with a VA loan if you've applied to retire within the next 12 months. The home doesn't have to be your primary residence until you've retired. That means you could buy a property to use as a vacation home in the year before you retire, then move in once you've actually retired.

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