What is a VA Renovation Loan?
The VA Renovation Loan is a program that combines the best of two worlds—renovation financing and VA benefits. It is backed by Veterans Affairs and allows the borrower to make structural or cosmetic improvements on a home that they want to buy, sell or improve.
The flexibility of a traditional renovation loan is enhanced when paired with the benefits of VA loans.
What Are the Benefits of a VA Renovation Loan?
A VA Renovation Loan has many benefits. Here are just a few of them:
- 0% down payment upon closing – One of the most attractive benefits of a VA loan is the 0% down payment upon closing. 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.
- Flexibility – You can use your VA 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.
VA Renovation Loan for Buyers
The VA Renovation Loan allows buyers to purchase a home that is not in brand-new condition and make structural or cosmetic repairs.
Imagine this: you’ve zeroed in on the home you want to buy. It is in the perfect area, it is close to all your favorite activities and it is the ideal home for you or your growing family. You find out that the house is great structurally, but it is in less-than-desirable condition.
This is where a VA Renovation Loan would come into play.
You would use the VA Renovation Loan to purchase the home in addition to using it for renovation repairs.
A renovation refinance is where a buyer not only renovates their home but also refinances at a lower interest rate. This is common for buyers who purchased their homes during a time of high-interest rates.
This person may also now have veteran status or is eligible for a VA loan. A common situation is a buyer becoming eligible for VA benefits while already living in a home. This home may need structural and/or cosmetic repairs that the VA Renovation loan can come in.
A VA Renovation Loan is the perfect solution to each of these situations. Not only do the buyers get a better looking and functioning home, but they’re able to reach a lower interest rate as well.
Am I Eligible for a VA Renovation Loan?
A Homebridge Mortgage Loan Originator can help you narrow down your eligibility, but here’s our quick list of who would be eligible for a VA Renovation Loan.
- 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 and find out details of 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.