Anyway, since we left earlier than anticipated, we decided to sell the house. Thanks to this wonderful economy, we didn’t get the house sold before we left. We can probably last through January or February before we run out of money and need to look at other options to pay the mortgage on our empty house.
Naturally, the question arose about renting out the house until it sold. However, there are a lot of rules that apply to VA loans that don’t apply to conventional loans. Now that I’ve worked through the questions and answers about what we can and cannot do, I wanted to share some of these lessons learned.
Can I sell a VA loan home at a profit? The answer is yes and no. You cannot use a VA loan to simply buy a house and “flip it.” VA loans must be used towards the purchase of a primary residence. As long as you’ve lived in that home at least two years, there isn’t generally a problem with selling it, especially if you’re selling it due to PCS orders. In order to sell the home, you either need to pay off what is owed or the buyer must qualify to assume the VA loan. Check out the VA Mortgage Center website for information on how to qualify for a VA loan.
Can I rent a VA loan home? The answer is yes and no again. You cannot use a VA loan to purchase a rental home. As I mentioned before, VA loans may only be used to purchase a primary residence and not a second or third house to be used as an investment property. But, once you’ve lived in the home, if you don’t want to sell it there are no restrictions on renting it out.
The VA gets a little sticky, though, when you live in the home a very short time and then try to rent it out. For example, when we left our house in Georgia after a short two years, I got a very nasty letter in the mail from the VA when I changed my home insurance to renters insurance. They wanted to know why I was renting it out after just two years. Once I explained that I was on military PCS orders and didn’t want to sell the house, they changed their tone. It would have been much different had I simply purchased another home and then rented out my VA loan house, I think, after just two years. It looks fishy and the government thinks they’re being taken advantage of. (side note: isn’t it interesting that the government can take advantage of us day in and day out but get their gander up when you try to take advantage of them? Just a thought.)
I will say that with some mortgage companies, you may have to submit a letter requesting permission to rent out a VA loan house. Obviously, they also require that insurance is maintained on the house. I advise you to get with your mortgage company before making any rental decisions so it doesn’t bite you in the butt later.