A VA Renovation Loan is a great option for veterans, active military members, and their surviving spouses who wish to upgrade or improve their property. It is backed by the U.S. Department of Veterans Affairs and allows borrowers to purchase or refinance a home that needs repairs or improvements while also incurring little to no out-of-pocket costs.
The VA Renovation Loan is similar to the FHA 203(k) loan, allowing borrowers to purchase and repair a property using a single VA loan. But unlike the 203(k) loan, VA Renovation Loans require no down payment or mortgage insurance. This makes it an attractive option for veterans looking to purchase a fixer-upper.
Unfortunately, VA Renovation Loans are not widely available from traditional lenders. Fewer than 10% of VA lenders offer the loan product, making it difficult to find a lender that can provide financing. Blake Mortgage is one of the few VA lenders that does offer it.
Benefits of VA Renovation Loan
The benefits include the following:
- No down payment is required.
- No mortgage insurance.
- Low-interest rates.
- Ability to roll in repair costs into the loan.
- Ability to finance up to 100% of the purchase price and repair costs.
- It can be used for energy-efficient improvements.
Am I Eligible for a VA Renovation Loan?
To be eligible for a VA Renovation Loan, borrowers must meet the qualifications for a VA loan:
- Be an active duty member of the U.S. military, veteran, or surviving spouse.
- Have a minimum qualifying credit score of 580.
- Meet the income, asset, and minimum property standard requirements.
In addition, borrowers must also meet the following criteria:
- Construction must be completed within nine months of closing.
- Only one General Contractor may be used.
- General Contractor must be registered with the VA.
- General Contractor must carry a current general insurance liability policy.
If you meet the qualifications for a VA loan and are interested in making improvements to your property, a VA Renovation Loan is a great option. Contact Blake Mortgage for more information on VA Renovation Loans.
VA Renovation Loan Requirements
To approve a VA Renovation Loan, borrowers must meet the basic VA loan service requirements and have a valid Certificate of Eligibility. Credit scores also vary by lender, but you’ll typically need at least a 620 mortgage credit score.
In addition to the basic VA loan requirements, a renovation loan will also require that:
- The home must be your intended primary residence (once repairs are complete).
- Your renovations need to improve the home’s livability, use, and safety (not just aesthetic value).
- Your contractors and builders must have a valid VA builder identification number.
- All construction must be completed within nine months of closing, and only one general contractor may be used.
- The contractor must also be registered with the VA and carry a current general insurance liability policy.
Allowable Improvements Under VA Renovation Loans
While there are some limits to what you can repair and improve using a VA renovation loan, here are some of the improvements that are allowed:
- Repair or add new windows, doors, and siding.
- New roof or gutters.
- Install new HVAC systems or water heaters.
- Improve insulation.
- Treat mold, lead paint, or asbestos.
- Make updates to improve energy efficiency.
- Repair or replace the flooring.
- Repair or replace electrical or plumbing systems.
- Accessibility updates.
Why Might I Get a VA Renovation Loan?
VA Renovation Loans are ideal for veterans and service members who want to purchase a fixer-upper. The VA allows veterans to finance up to 100% of the purchase price and renovation costs, so it can be a great way to get into a home without having to make a large down payment.
It’s also a great option for those who want to make updates and improvements to their existing home as long as the renovations improve the home’s livability, use, and safety.
In addition, a VA Renovation Loan allows veterans to finance energy-efficient improvements, which can help save money on energy costs in the long run.
Can I Buy a Home with a VA Renovation Loan?
Certainly! With a VA Renovation Loan, veterans have the opportunity to purchase a home while financing both the property’s cost and the expenses for renovations through a single loan.
Certain criteria must be met by the property, including a functional floor plan and the absence of any potential health or safety risks. Additionally, an appraisal is required to evaluate the current value of the home and its projected worth post-renovations.
Upon completion of the renovation work, a VA inspector will perform a final certification to ensure compliance with property standards and readiness for the new homeowners.
Can I Use VA Renovation Loans to Refinance My Existing Mortgage?
Yes, you can use a VA Renovation Loan to refinance an existing mortgage. This type of loan is an excellent alternative to a second mortgage, or cash-out refinance if the funds will be used to repair and update your home.
VA Renovation Loans are a great way to help veterans and service members get into a new home or improve their existing one. Talk to Blake Mortgage today to learn more about this loan program and determine if it’s right for you.
How Do I Apply for a VA Renovation Loan?
Applying for a VA Renovation Loan is easy and can be done in just a few steps. The first step is to get pre-qualified, which will require providing proof of your military service, a valid VA home loan certificate of eligibility, and other financial and credit information.
Once pre-qualified, you will be able to start the application process. During this step, you will need to provide detailed estimates from contractors outlining the scope of work and estimated costs for the renovations.
When you’re ready to get started, CLICK HERE or give us a call at (480) 699-1055. Our team of loan officers can help you apply for a VA Renovation Loan and make sure everything is in order before the closing date.