Can I Use a VA Loan Before or After a PCS?

Can I Use a VA Loan Before or After a PCS?

Yes, an eligible service member may be able to use a VA loan before or after a Permanent Change of Station, commonly called a PCS. The timing depends on the borrower’s orders, intended occupancy, employment and income, available VA entitlement, current housing obligations and lender requirements.

Military families do not always receive much time between receiving orders and reporting to a new duty station. Beginning the mortgage review early can help identify potential issues before selecting a home or signing a purchase contract.

Can I Apply for a VA Loan Before Receiving PCS Orders?

You can begin preparing before receiving final PCS orders. A lender can review your credit, debts, assets, military income, Certificate of Eligibility and current housing situation.

However, a preliminary review is not the same as final loan approval. Before closing, the lender must be able to document the income used to qualify, the intended occupancy of the new property and other applicable VA requirements.

If the new duty station, report date or future income is uncertain, the lender may need final orders or other documentation before approving the loan. Purchasing before receiving firm orders can also create financial risk if the assignment or location changes.

Documents that may help with an early review include:

• Current Leave and Earnings Statements

• Recent bank and investment statements

• Your Certificate of Eligibility

• Information about your current mortgage or lease

• Preliminary assignment information, if available

• Expected report dates or training schedules

• Details about any property you intend to keep, sell or rent

• Information about your spouse’s employment or income

An early review can establish a budget and identify what will still be needed when the orders are issued.

Can I Close on a Home Before I Physically Relocate?

Possibly. A VA-backed purchase loan is intended for a home that will be used as the borrower’s primary residence. The borrower generally must certify a genuine intention to occupy the home within a reasonable time.

Occupancy is commonly expected within approximately 60 days after closing. A longer period may sometimes be considered when there is a specific future occupancy date and a documented event—such as a military reporting date—that will make occupancy possible.

The lender must review the actual circumstances. A VA loan cannot be used to purchase a vacation home or a property intended solely for investment.

Can My Spouse Satisfy the Occupancy Requirement?

In certain circumstances, occupancy by a spouse may satisfy the VA occupancy requirement when an active-duty service member cannot personally occupy the property within the normal period because of military duties.

Occupancy by a dependent child may also be considered in certain active-duty situations, but additional certification or documentation may be required. Lender requirements can vary, and unusual occupancy arrangements may require review by the appropriate VA Regional Loan Center.

The occupancy plan should be disclosed before a purchase contract is signed. Do not assume that a spouse, child, parent or other family member living in the property will automatically satisfy the requirement.

What If I Receive PCS Orders After Buying My Current Home?

A later PCS does not mean that the service member’s original VA loan was improper. The important issue at the time of the original purchase was the borrower’s genuine intent to occupy that property as a primary residence.

Military assignments can change. After receiving PCS orders, the service member may decide to:

• Sell the current home

• Keep the home temporarily

• Convert the home to a rental property

• Allow family members to remain in the home

• Purchase a new primary residence near the next duty station

Each choice affects entitlement, monthly debt, available cash and mortgage qualification differently.

Can I Keep My Current Home and Obtain Another VA Loan?

Possibly. A service member may be able to retain a home with an existing VA loan and use remaining entitlement to purchase another primary residence near the new duty station.

This is sometimes referred to as having two VA loans at the same time. Approval depends on:

• The amount of entitlement already charged

• The remaining entitlement available

• The applicable county loan limit when partial entitlement is involved

• The price and appraised value of the new home

• The borrower’s ability to qualify with both housing obligations

• The proposed use of the current home

• Occupancy of the new property

A down payment may be required if the remaining entitlement does not provide the guaranty needed for the proposed new loan.

How Do I Know How Much Entitlement I Have Left?

An updated Certificate of Eligibility shows the entitlement currently charged to prior or active VA loans. When entitlement remains in use, the lender can calculate the estimated remaining entitlement available for another transaction.

Remaining entitlement does not by itself guarantee approval. The lender must also evaluate the borrower’s income, debts, credit, assets, residual income, occupancy and the property.

If the current VA-financed home is sold and its loan is paid in full, the borrower may be able to request restoration of the entitlement used for that property.

Will I Have to Qualify With Both Mortgage Payments?

The lender will generally consider the payment on the current home unless the property is being sold before or at the time the new loan closes, or acceptable rental income or another permitted offset can be documented.

If the current property will become a rental, the lender may request:

• A signed lease

• Evidence of the security deposit or first rent payment

• A market-rent analysis

• Current mortgage, tax, insurance and homeowners-association information

• Evidence of adequate financial reserves

• Documentation of prior property-management or landlord experience when required

The lender may use only an allowable portion of the documented rent. Rental income may not eliminate the full housing payment from the loan analysis.

Can I Use Projected Military Income at the New Duty Station?

Military base pay and other documented income expected to continue may be considered under applicable VA and lender requirements.

A PCS may affect:

• Basic Allowance for Housing

• Basic Allowance for Subsistence

• Special or incentive pay

• Flight pay

• Overseas or cost-of-living allowances

• Spousal employment income

• Travel or temporary-lodging reimbursements

Not every payment shown on a Leave and Earnings Statement is necessarily qualifying income. Temporary reimbursements are different from dependable recurring income.

If an allowance or pay component will change at the new duty station, the lender may need PCS orders, an updated Leave and Earnings Statement, a military verification of employment or other documentation showing the amount expected to continue.

What Happens If My Spouse Must Leave a Job Because of the PCS?

The spouse’s current income may not be usable if that employment will end because of the move. If the spouse has secured new employment near the next duty station, the lender may evaluate the new job under the applicable employment-offer and income rules.

A signed offer letter does not automatically make all projected income acceptable. The lender may need to verify the position, compensation, start date, contingencies and whether the new employment will begin within the period allowed by the selected loan program.

This is one reason to review a PCS mortgage strategy before calculating the maximum home price.

Should I Sell or Keep My Current Home?

There is no universal answer. Keeping the home may preserve a long-term asset and provide rental income, but it can also create vacancy, repair, management and cash-flow risks.

Selling may:

• Pay off the existing VA loan

• Make entitlement restoration possible

• Eliminate the current mortgage payment

• Provide funds for the next purchase

Keeping the property may:

• Preserve a favorable interest rate

• Provide potential rental income

• Allow the family to return later

• Require the use of remaining rather than restored entitlement

• Increase reserve and qualification requirements

The decision should be based on realistic rent, property-management costs, repairs, vacancy, entitlement and the service member’s complete financial position.

When Should I Start the Mortgage Process?

It is often helpful to begin the review before selecting a property and, when possible, before the PCS becomes urgent.

A useful sequence is:

Obtain an updated Certificate of Eligibility.

Review current income, debts, credit and assets.

Estimate any change in military pay or allowances.

Decide whether the current home will be sold, retained or rented.

Calculate remaining or restored VA entitlement.

Determine how the current housing payment will be treated.

Document the intended occupancy date for the new home.

Obtain a mortgage preapproval based on the actual PCS scenario.

This approach can reduce uncertainty and help avoid signing a contract for a home that does not fit the final loan analysis.

Work Directly With a Fellow Veteran and Military Aviator

I’m Chris Zarnik, owner of Positive Rate Mortgage, LLC. I’m a veteran, retired Air Force Reserve military aviator, professional pilot and mortgage broker. I previously flew the T-38, KC-10 and KC-135 and currently fly the Boeing 767 for a major cargo carrier.

I have worked in mortgage origination since 1998 and have completed more than 3,000 mortgages. I understand how PCS orders, military pay, allowances, entitlement and existing housing obligations can affect a mortgage application.

As an independent mortgage broker, I can compare appropriate options from multiple wholesale lenders rather than being limited to one lender. Positive Rate Mortgage is licensed to originate mortgages in 37 states.

Contact me directly before or after receiving PCS orders for a personal review of your VA eligibility, entitlement, occupancy plan and mortgage options.

This information is provided for general educational purposes and is not a commitment to lend. VA eligibility, entitlement, occupancy, income calculations, loan approval, interest rates, fees and program availability depend on the borrower’s complete application, documentation, property, applicable program requirements and lender underwriting.