If you’ve served in the United States armed forces for a specific length of time or are the surviving spouse of a deceased service member, there are many benefits available to you as a homebuyer.
One of these benefits is the VA Renovation Loan. It’s a great program created to help you buy or improve a home. If you’re looking to move into or renovate your dream home, the VA Renovation Loan may be a great fit for you.
What Is the VA Renovation Loan Program?
The VA Renovation Loan is a program backed by Veterans Affairs and allows the borrower to make structural or cosmetic improvements to the home they currently live in, want to sell or are interested in purchasing.
Renovation loans are remarkably flexible! They can be used to help improve a home’s resale value, add extra amenities or spruce up a home that’s about to be sold. With a VA benefit added on to the renovation loan, it makes it an even better choice for our nation’s veterans.
The Benefits of a VA Renovation Loan
The VA Renovation Loan has all the benefits of a traditional VA loan such as:
- 0% down payment upon closing – You’re not required to have a down payment. Conventional loans typically require at least 5% while an FHA loan requires at least 3.5% of the total home mortgage.
- No monthly mortgage insurance – Buyers are not required to pay private mortgage insurance (PMI).
- Lower than average interest rates – VA loans have the lowest average interest rates of all loan types.
The VA Renovation Loan will also carry all the benefits of traditional renovation loans such as:
- Flexibility – You can use your renovation loan to buy, sell or improve a home that is not in brand new condition.
- Increase home value – A renovation loan will help you purchase upgrades that will help make your home a more valuable asset.
- Tax deductions – On a renovation loan, you can deduct the loan interest.
Why Should I Use a VA Renovation Loan?
Some people wonder why they would use a VA Renovation Loan over a traditional VA loan, especially when purchasing a home. Here’s a quick list of reasons why someone would choose using a VA Renovation Loan vs. a regular (renovation) loan.
According to the Joint Center for Housing Studies at Harvard University, new household construction lags behind demand for housing. The average age of a home is 37 years. This number may be even higher depending on the city or town. Since many homes are older, they will often need updates to their amenities, many of which a renovation loan can cover.
There are some incredible older homes that offer both charm and desirable surroundings, but just need a little work to meet modern housing standards. A VA Renovation Loan can help cover just that.
A Strong Start to Creating Home Equity
With a 0% down payment and the ability to increase the value of a home through renovations, the VA Renovation Loan is an attractive offer to veterans who want to reach a break-even point on their home sooner than the average.
By wrapping your renovation loan into your mortgage payment, you have the opportunity to get a great home at an even better cost and can build equity and home value faster than you would with a conventional loan.
VA Renovation and Refinance
One of the best uses of a VA Renovation Loan is the ability to wrap both a renovation and a refinance into one powerful package.
If you are a veteran who bought their home before you entered the armed forces or were designated with veteran status, then you should consider this exceptional option. Not only will you be able to make repairs on your home and increase its value, but you have the option to then refinance into a lower interest rate—lowering your monthly mortgage payment and increasing the value of your home!
Am I Eligible for a VA Renovation Loan?
After reading all the benefits of the VA Renovation Loan, you may wonder, “Do I qualify for this loan?” We’d recommend connecting with a Homebridge Mortgage Loan Originator to find out—but a quick summary of who’s eligible:
- Reserve members
- Active-duty personnel
- National Guard members
- Some surviving spouses
You must also have good credit, sufficient income and a valid Certificate of Eligibility (COE). If you’re active duty, you will generally qualify after about six months. Reserve members and members of the National Guard must wait six months before they can apply unless they’re called to active duty before that time.
If you want to learn more about the VA Renovation Loan program and your eligibility, reach out to a Homebridge Mortgage Loan Originator. They will help guide you through the process, answering any questions you may have along the way.