VA loans can be a tricky maze to navigate if you don’t know what’s what. Today, we’ll look at what you can do if you need to remodel your home in any way using VA loans to finance it. We’ll look at what you can do if the home you’re looking to finance isn’t move-in ready if you’re not in the position to use some form of VA cash-out refinancing.
Why Can’t You Use Regular VA Loans For Remodeling?
The Department of Veterans Affairs issues minimum property requirements (MPRs) that any home needs to meet if you want to finance it with VA loans. The nub of these MPRs is that the home you’re looking at needs to be structurally sound and move-in ready. There’s some great news if you’ve got your eye on a property that could use some TLC. A VA renovation loan is a smart way to rustle up a fighting fund to make sure the house of your dreams meets those MPRs, and you can enjoy all the benefits of VA loans while turning a fixer-upper into a cozy home.
VA Renovation Loan: Get Up To $35,000 For Repairs and Improvements
If you decide a VA renovation loan is the best fit to get the home you’re looking at in tip-top shape, you should understand that this is a second loan, but it doesn’t function in quite the same way as regular supplemental loans.
This rehab loan gets bundled up with your original VA loan so you’ll only have a single monthly payment while enjoying all the zero-down benefits and lower closing costs without having to rely on a third-party secondary loan.
As you’d expect, there are a few vital areas to think about if you’re looking to make use of this branch of VA loans so we’ll double down on that now.
Specifics of VA Renovation Loans
VA renovation loans, also known as VA rehabilitation loans can be financed over 30 years. This gives you a significant advantage over the much shorter-term secondary loans usually associated with remodeling. If you’re looking for a lower monthly payment, these VA loans designed for renovations are tailor-made. You’ll need to keep repairs under $35,000, and you’ll need to pay close attention to the comprehensive list of acceptable renovations we list out right below.
Since the very goal of this program is to render a prospective home suitable for financing with VA loans and compliant with all MPRs, you’ll need to prove the work you have in mind meets VA standards. This is all taken care of during the underwriting segment when you’ll submit plans and details of your chosen contractor. It’s all straightforward stuff if you’re guided through.
If you need some new equipment, it’s worth bearing in mind you can use up to 25% of your loan to buy appliances and non-fixtures, so you’ve got plenty of leeway when it comes to achieving the home revamp you’ve always dreamed of without a stiff monthly penalty. This comes with certain caveats so don’t get the idea you can slip in a new hot tub or add another room to your property.
So, whether you’re looking for a way to defray the costs of remodeling over a more generous timeframe, or you’ve found a house in need of sprucing up so you can take advantage of all that VA loans have to offer, this type of rehabilitation refinancing is a little-known gem from the Department of Veteran Affairs. Now you have a solid overview of why this type of loan might make sense, what can actually do with these VA loans?
What Repairs and Remodeling Can You Carry Out With VA Rehabilitation Loans
Before you get carried away with ambitious plans of random remodeling, familiarize yourself with the particular set of repairs allowable by the VA:
Flooring and subflooring whether tile, wood, or carpet
Roofing repairs or replacement
Plumbing and including replacement of the whole system
Kitchen remodeling: cabinets, appliances, total renovation
Electrical repairs and replacement
Work on HVAC systems
Attention to foundations of property
Painting inside and out
Any appropriate energy-efficient tweaks
So, as long as the work you plan to carry out falls within those pretty broad parameters and comes in at less than $35,000, you can easily use this arm of VA loans to remodel your home adding value to your home in an aggressive market.
Don’t believe everything you read about the limitations of VA loans. Instead, do your research and end up one of the 22 million happy beneficiaries of this excellent program helping those who’ve supported our country even if the house you’re looking at needs some work before you move in.
Get in touch for advice on all aspects of financing your house purchase with VA loans, and we’ll help you every step of the way.