Should You Purchase a Timeshare, RV, or Vacation Home?

Timeshares, RVs, and vacation homes can all seem like appealing ways to enjoy life after service. But before committing to any of these purchases.

There are important financial and legal considerations to weigh, and one rule that applies to all three, including whether or not you can use your VA home loan benefit to make any or all of these purchases.

Should You Purchase A Timeshare?

Timeshares let you pay for access to a property you can use only a limited number of days per year — and you’ll pay ongoing maintenance fees for the privilege, which typically increase over time.

The Federal Trade Commission dedicates an entire page on its website to timeshare warnings. Key things to know before signing anything:

• You will be legally bound to own the timeshare either for life or for the period specified in your contract.
• Some timeshare offerings are for properties not yet built. These carry a high risk of fraud, so make sure your contract includes protections for construction delays or non-fulfillment.
• Third-party resellers and exchange companies add another layer of complexity. Always research the seller, developer, and management company before committing.

The bottom line: don’t sign anything you don’t fully understand, and don’t sign a contract that differs from what was verbally promised. When in doubt, consult a real estate attorney.

Should You Purchase An RV?

Opinions on recreational vehicles, or RVs, vary. Owning an RV is not for everyone, there are specific challenges associated with simply getting out of the driveway with one of these impressively oversized vehicles.

RVs offer freedom and flexibility, but they come with real trade-offs:

• Poor fuel efficiency: not ideal if cost-per-mile matters to you.
• Specialized operation: RVs require training to drive safely. Most dealers offer instruction, and you should take it.
• Depreciation: RVs lose significant value after purchase. Don’t expect to recoup your investment if you sell.
• Parking restrictions: Local ordinances vary widely. Know the rules before you park anywhere unfamiliar.

RVs are well-suited for cross-country highway travel, but less practical for urban environments or off-the-beaten-path roads not designed for large vehicles.

Should You Purchase A Vacation Home?

Unlike timeshares, a vacation home is real property you own outright, but it comes with its own set of considerations. You’ll need to establish a primary residence, and lenders will evaluate your credit, payment history, and debt-to-income ratio with both properties factored in. A strong record on your current mortgage goes a long way.

Also keep in mind: vacant homes carry risks. Extended periods of vacancy can mean weather damage or security concerns. Planning ahead for these is essential.

The One Rule That Applies to All Three

Here’s what makes this straightforward for VA loan borrowers: you cannot use a VA loan to purchase a timeshare, RV, or vacation home.

• Timeshares and vacation homes don’t meet VA occupancy requirements. VA mortgages are for primary residences only, occasional-occupancy properties are specifically excluded, and vacation homes are called out by name in the VA Lender’s Handbook (VA Pamphlet 26-7).
• RVs cannot be classified as real property. VA loans require the purchased property to be affixed to a permanent foundation, something an RV, by definition, cannot be.

If you’re considering any of these purchases, you’ll need to explore conventional financing options and weigh the costs and risks accordingly.