Are you looking to buy a home, but everything within your price range requires some improvements or upgrades to make it just right? The VA Renovation Mortgage Loan is a solution you can use to both buy and improve your new home or existing home.
Our team is excited to announce that VA now offers a VA Renovation Loan! Our loan offers cutting-edge and client friendly features of many popular mortgage programs.
Not only do you get the full benefits of a zero-down VA mortgage loan, but you can include up to $35,000 total renovation cost for improvements.
What is a VA Renovation Loan?
The function of this loan to provide a product for VA borrowers to perform minor remodeling and non-structural repairs while purchasing or refinancing their home. It contains NO money down financing that covers not only the current value of the property but the cost of remodeling and repairs as well. This program is intended for minor updates and work done on the home, with NO minimum or maximum renovation cost requirement. Typically the repairs are done within 90 days.
Keep in mind that the total renovation cost must not exceed $35,000 (no minimum renovation cost). And as with all renovation loans each lender may allow different things to be done so important to review with your loan officer.
VA Loan Limits
VA does not set a cap on how much you can borrow to finance your home. However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you. The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a down payment. These loan limits vary by county, since the value of a house depends in part on its location.
Minor Remodeling and Non-Structural Repairs
To be eligible for a VA Renovation Loan, you must only be planning small scale work like replacing the flooring, installing kitchen or bathroom renovation, or carrying out minor repairs. The loan can also include minor repairs to roofs and gutters and small scale repairs to electrical and plumbing installations in the house.
Example of Eligible Repairs for the VA Renovation Loan:
- Repair/Replacement of roof, gutters, and downspouts
- Repair/Replacement of flooring
- Minor remodeling; such as kitchens and baths
- Attics and basements, as long as nothing is structural
- Window and door replacement and exterior wall re-siding
- Repair existing driveway
- Repair/replace existing Fencing, decks, patios, porches
- Painting, both exterior and interior
- Purchase and installation of appliances;
including free-standing ranges, refrigerators, dishwashers, and microwave ovens
Accessibility improvements for persons with disabilities
Examples of Non-Eligible Repairs of a VA Renovation Loan:
Items and improvements that do not become a permanent part of the real property are NOT eligible.
- Barbecue pit, outdoor fireplaces, hearths, bathhouses, tennis courts
- Exterior hot tubs, saunas, spas or whirlpool baths or Swimming pool installation
- Dumbwaiters
- Photo murals
- Television antennas and satellite dishes
- Tree surgery or Landscaping on-site amenity improvements
- Additions or alterations to provide for commercial Generators
- Repairs that do not allow the Borrower to occupy the property at closing or within 15 days of closing
- Relocation of load bearing walls, Room additions or Repairs of any structural damage
This program is designed and currently only allowed for use on owner occupied properties.
Now lets see what properties are eligible under this program :
1-4 unit properties
Condominiums ( must be VA approved )
Townhomes – PUD Attached/Detached
Manufactured Homes
New Construction ( completed less than 1 yr and never occupied )
How to Know Eligible for a VA Home Loan?
Veterans with active duty service, that was not dishonorable, during World War II and later periods are eligible for VA loan benefits. World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to January 31, 1955), and Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at least 90 days of service.
Veterans with service only during peacetime periods and active duty military personnel must have had more than 180 days of active service. Veterans of enlisted service which began after September 7, 1980, or officers with service beginning after October 16,1981, must in most cases have served at least 2 years.
VA Documentation Needed:
The three specific pieces of documentation a lender will need to determine your eligibility is a DD214 for discharged veterans, a statement of service for active military personnel, and a certificate of eligibility (COE) to determine you have VA entitlement.
Because each lender has different qualifying guidelines, the next step is to contact your lender to find out if you meet their qualifying criteria such as minimum FICO/credit scores, debt-to-income (DTI) ratios, and find out what your county’s maximum loan amount is. Your lender can help you attain your certificate of eligibility on your behalf.
VA Does Not Offer Loans Directly and Does Not Guaranty You Will Qualify.
VA does not actually lend the money to you directly. They offer a guaranty to a lender that if you should default on the loan, they will pay the lender a percentage of the loan balance. The word GUARANTY does not actually guarantee the veteran will qualify for a VA home loan.
Primary Benefits of a VA Home Loan:
100% financing
No monthly private mortgage insurance is required
There is a limitation on buyers closing costs
The loan is assumable, subject to VA approval of the assumer’s credit
30 year fixed loan
Seller can pay up to 4% of the veterans closing costs and even pay down your debt to help lower your debt-to-income ratio
Interest rates are similar to FHA rates
You don’t need perfect credit
Credit, Credit, Credit
So what kind of credit score do you need to be VA Reno eligible?
The loan works just like the traditional VA loan for credit, down payment, and general underwriting guidelines, and some lenders may place overlays on top of the program to protect themselves.
Down Payment?
Buy and Repair with a Zero-Down VA Renovation Mortgage Loan!
Call me today, and let’s get you approved with the new VA Renovation Loan!
If you have any questions about using your VA benefit for a renovation loan or would like to get started on the path to homeownership, please contact me at any time!