How Long Do You Have to Live in a VA Loan Home Before Selling?

If you’re a veteran who has recently purchased a home using a VA loan, you may be wondering how long you have to live in the home before you can sell it. While there’s no hard and fast rule, there are a few things to keep in mind.

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The Basics of a VA Loan

A VA loan is a mortgage loan that is backed by the United States Department of Veterans Affairs (VA). The loan is available to veterans, active duty service members, and certain reservists and National Guard members. The VA loan program was created to help veterans finance the purchase of a home.

Eligibility

All veterans and active duty service members are eligible for a VA home loan. You must have satisfactory credit, sufficient income and a valid Certificate of Eligibility (COE) to be eligible. You can get a COE through a lender, or through the Veterans Administration directly.

If you’re a reservist or National Guard member, you must have served for at least six years to be eligible, and you must meet the requirements outlined in your character of service.

You can only have one VA loan at a time, and you can’t use a VA loan to purchase investment property or a second home. You also can’t use it to refinance an existing non-VA loan, though there are some circumstances where you can refinance an existing VA loan with another VA loan.

The Loan Process

The loan process for a VA loan is similar to other types of home loans, but there are a few key differences. For one, you’ll need to get a Certificate of Eligibility from the Department of Veterans Affairs before you can even apply for a loan. You can get this certificate by completing an online application, or by mailing in a completed paper application.

Once you have your certificate, you’ll need to find a lender that participates in the VA home loan program. Not all lenders do, so it’s important to do your research. Once you’ve found a participating lender, you’ll need to fill out an application and submit it, along with your certificate of eligibility, to the lender.

The lender will then review your application and determine whether or not you qualify for the loan. If you do, they will send you a Loan Estimate, which outlines the terms of the loan and what your monthly payments will be. Once you’ve reviewed and agreed to the terms of the loan, the lender will send you a Closing Disclosure. This document outlines the final terms of the loan and what your closing costs will be. You’ll have three days to review this document before you close on the loan.

Once everything is finalized, you’ll close on the loan and will then have up to twelve months to find a home and move in. After that, the home becomes yours and you’ll begin making monthly payments on the loan.

How Long You Have to Live in a Home Before Selling

If you have a VA loan, you may be wondering how long you have to live in the home before selling. The answer to this question is not as clear cut as you might think. There are a few things to consider before making a decision. Let’s take a look.

The Rule of Thumb

The rule of thumb for how long you have to live in your house before selling is two years. However, things have changed a bit in the last few years and that rule may no longer apply in certain cases.

If you’re thinking about selling your home before you’ve even lived there for two years, you may be wondering if you’re eligible for a VA loan. The answer is yes, but there are a few things to keep in mind.

For starters, if you’re not married to your fellow veteran, only one of you needs to meet the residency requirement. Additionally, if you move due to a job loss or other life circumstances outside of your control, you may be eligible for what’s known as a “bona fide” exception. This exception allows those who have to move for work-related reasons or because of a family member’s illness to sell their home without having to wait the full two years.

Of course, there are other factors that come into play when selling a home, such as how long you’ve been paying on your mortgage and whether or not you’ll owe any money to the bank after the sale. But if you’re simply trying to figure out if you can sell before hitting that two-year mark, the good news is that it’s definitely possible.

Exceptions to the Rule

There are a few exceptions to the rule requiring you to live in your home for a minimum of 12 months before selling. If you are deployed on active military duty, or you are transferred by your employer more than 50 miles from your home, you may sell your home before the 12-month mark. You will need to provide documentation to your lender proving deployment or transfer in order to qualify for this exception.

What to Do if You Need to Sell Before the Two-Year Mark

You may have heard that you need to live in your home for two years before selling if you have a VA loan. This is not necessarily true. You can sell your home before the two-year mark, but you may have to pay a penalty. The penalty is called a funding fee, and it is a percentage of the loan. The funding fee is 2.15% for first-time users of the VA loan program, and 3.3% for subsequent users.

Refinancing

If you need to sell your home before the two-year mark, you may be able to refinance your VA loan to a conventional mortgage. This will require that you prove you have the income and credit score necessary to qualify for a conventional loan. You will also need to have enough equity in your home to cover the difference between your current loan balance and the new, higher purchase price.

Selling the Home for Less Than You Owe

If you sell the home for less than you owe on the mortgage, you are “underwater.” You’ll still have to pay the mortgage company the remaining balance of what you owe, even if it’s more than the sales price of the home.

If you have to sell your home before living in it for two years, and you’re underwater, there are a few options available to help lessen the burden. The Department of Veterans Affairs has a few programs available for homeowners who need to sell their homes but owe more on their mortgage than the home is worth.

The first option is called a deed in lieu of foreclosure. With this option, you sign over the deed of your home to the mortgage company and they cancel the mortgage. This is an option that should only be used as a last resort because it will have a negative impact on your credit score.

The second option is called a short sale. A short sale is when you sell your home for less than what you owe on the mortgage and the VA agrees to forgive the difference. This option will also have a negative impact on your credit score but not as severe as a deed in lieu of foreclosure would.

The third and final option is called a Virginia loan assumption. With this option, another person takes over your loan and makes the payments for you. This can be a family member or friend but they must qualify for the loan based on their own finances and credit history. There are some restrictions with this option so be sure to speak with your accountant or financial advisor before taking this step.