A veteran wants to use a VA loan for a duplex, living in one unit and renting the other. An originator says VA is owner-occupied only, so the file is dead. What has to be checked?

Correct Answer

D) Confirm VA eligibility and occupancy requirements

Why this is correct: VA loans are a distinct government-backed program with unique requirements. The original explanation correctly anchors that VA loans involve eligibility, occupancy, guaranty, and funding-fee concepts. The defensible action is to confirm the specific VA program rules, which always include verifying the borrower's VA eligibility (e.g., Certificate of Eligibility) and ensuring the property will be occupied as a primary residence by the veteran, as these are core, non-waivable conditions. Why the other choices are wrong: "Apply conventional PMI rules instead of VA program requirements" is wrong because VA loans do not use private mortgage insurance (PMI); they use a government guaranty. "Treat the VA guaranty as a substitute for occupancy verification" is wrong because the guaranty does not eliminate the mandatory requirement to verify the borrower's intent to occupy the home. "Ignore VA eligibility once credit and income are acceptable" is wrong because VA eligibility is a separate, fundamental prerequisite for the loan program; creditworthiness does not override it. Exam tip: For any VA loan question, remember the core pillars: Eligibility, Occupancy, Guaranty (not PMI), and Funding Fee. Always confirm the first two.