A veteran buying a home 300 miles from where he works asks whether the VA occupancy requirement is a problem. What does the file need to establish?
Correct Answer
D) Confirm VA eligibility and occupancy requirements
Why this is correct: VA loans are only available to eligible veterans, service members, and certain surviving spouses, and the property must be occupied as the borrower's primary residence. Confirming these two requirements is a mandatory, defensible step. The original explanation correctly notes VA loans rely on eligibility and occupancy concepts. Why the other choices are wrong: "Apply conventional PMI rules instead of VA program requirements" is wrong because VA loans do not require private mortgage insurance (PMI); they use a guaranty and funding fee structure. "Use prior changed-circumstance approval as a substitute for the current VA Loan Limits requirement" is wrong because prior approvals for other issues (like a changed circumstance on disclosures) do not satisfy ongoing VA eligibility checks. "Ignore VA eligibility once credit and income are acceptable" is wrong because credit and income are separate from VA entitlement and occupancy requirements, which are mandatory. Exam tip: Always obtain and review the borrower's Certificate of Eligibility (COE) and confirm primary occupancy intent for a VA loan.
Why This Is the Correct Answer
The correct response is "Confirm VA eligibility and occupancy requirements" because VA-backed loans use VA eligibility, occupancy, guaranty, and funding-fee concepts.
Why the Other Options Are Wrong
Option A: Apply conventional PMI rules instead of VA program requirements.
Apply conventional PMI rules instead of VA program requirements. is not correct because it does not apply the rule tested by this file scenario.
Option B: Use prior changed-circumstance approval as a substitute for the current VA Loan Limits requirement.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option C: Ignore VA eligibility once credit and income are acceptable.
Ignore VA eligibility once credit and income are acceptable. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
VA loan eligibility and occupancy: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
Match the file facts to VA loan eligibility and occupancy; do not choose an exception or shortcut that skips the required rule.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
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