VA Renovation Loan Facts: A Guide for Veterans

Found the perfect home, but it needs some work? Or maybe your current home could use some updates? As a veteran, you have access to a unique financing option that can help you purchase or refinance a home and cover renovation costs all in one loan. Here's what you need to know about VA Renovation Loans and how they can help you create the home you want.

What is a VA Renovation Loan?

A VA Renovation Loan may be the right loan option for qualified veterans looking to make home renovations. This loan allows VA loan-eligible clients to bundle renovation costs into a new or existing VA home loan.

Your loan amount will be based on the appraised value of your home once improvements have been made. Repairs must start within 30 days and must be completed within the required timeframe based on the total cost of repairs.

Key Highlights

There’s no down payment required. Renovation costs are financed into your VA loan, making it easier to afford the improvements your home needs. Eligible properties include 1-2 unit, attached or detached, single-family homes, planned unit developments (PUDs), or VA-approved condos.

Expert Tip

The property must be your primary residence.

And you can purchase or cash-out refinance.

What Repairs Are Allowed?

The VA Renovation Loan covers a wide range of improvements, including:

• Roof repair or replacement, gutters and downspouts installation, repair, or replacement, and insulation for ceilings, walls, or asbestos removal.

• Siding, windows and doors replacement, as well as paint for interior, exterior, or lead paint abatement.

• Kitchen improvements, including replacing all appliances, cabinets or total replacement, and electrical repair, replacement or reconditioning.

• Plumbing repair, replacement or reconditioning, HVAC and other systems repair or replacement, and flooring or subflooring replacement.

• Fences, walkways and driveway installation, basement waterproofing, and termite treatment.

• Well and septic repair or replacement, and exterior decks, patios and porches repair or replacement.

Expert Tip

Approved work that takes less than six months to complete, does not exceed $75,000 upon completion, and adds value to the property is generally eligible.

Keep in Mind...

You'll need to keep making your mortgage payments. Unlike some renovation loans, there are no payment reserves built into a VA Renovation loan. This means you'll be responsible for your regular monthly mortgage payments throughout the construction period, so make sure to budget accordingly.

Your home must stay livable during construction. The VA requires that your home remains habitable throughout the renovation process. You can't do renovations that would make the home unlivable, such as completely gutting the property or removing essential systems like plumbing or electrical.

Changes to your project have limits. While you can upgrade items from your original bid through a change order (like choosing a higher-quality countertop, for example), you cannot add entirely new scope items that weren't part of the original plan. Plan your renovations carefully from the start.

Special properties need extra approval. If you're buying in a Historical District or a property with HOA requirements, you'll need to get written approval before closing. Your renovations will also need to comply with any restrictions or guidelines these organizations have in place.

Got it all? Yeah, we know, that was a lot. If you have questions about whether a VA Renovation loan is right for your situation, we can talk through your specific needs and see if this program can help you achieve your homeownership goals before yearend!