It's not easy to find the home of your dreams, but you may find a home that with a few repairs or a little renovating, can become your dream home. If you currently have a VA home loan and want to make improvements or want to buy a fixer-upper, there are programs available that can help finance the work.
Home improvement loans for veterans
VA home renovation loan.
The VA home renovation loan allows military members to purchase a home and roll improvement costs into the total loan amount or take out a second loan to pay for renovations. Home renovation loans are good for foreclosures and short sale purchases or for an existing home in need of some updating.
Pros of a VA home renovation loan
- Up to $75,000 in home renovations and repairs toward the purchase of a new home, but an inspection is needed when a new home buyer asks for over $50,000 in repairs.
- No down payment.
- Certain fees such as an inspection, title and permit can be financed into the home loan
- You can take out a second loan to pay up to $35,000 for renovations if you already have a VA loan.
- You can qualify for a home renovation loan with no minimum repair amount, so you can use this loan for a small repair.
Considerations of a VA home renovation loan
- No major renovations are permitted such as structural modifications like adding on a new room or luxury additions like a patio or pool. The length of the project cannot exceed four months from start to completion.
- Maximum repair amount is based on the VA county loan limits, so you need to make sure your loan stays within the range.
- VA home renovation loans may take a little longer to close because you need to secure a VA contractor, obtain up to three bids, and secure the permit and appraisal as well as other closing paperwork before the loan can be funded.
- Must meet minimum property requirements before you purchase a home in need of repair.
- Must pay a VA Funding Fee as an additional construction fee of up to 2% of the loan's value.
VA energy efficient mortgage loan
This is a loan that provides up to $6,000 for energy-efficient upgrades. Here are some energy-improvement projects related to your home that you can finance with this loan:
- Solar heating and cooling
- Updating a furnace
- Storm doors or windows
- Caulking weather stripping
- Programmable thermostats
- A new HVAC or AC unit (this only includes permanent upgrades, not window AC units)
Pros of a VA energy efficient mortgage loan
- No down payment
- No mortgage insurance
- No energy audit
- You can do the work yourself
Considerations of a VA energy efficient mortgage loan
- Must pay the VA funding fee
- Extra money is still subject to lender approval
VA supplemental loans
These loans allow veterans to make home improvements or repairs on a new or existing VA loan. According to the VA, they can be used for "improving the basic livability or utility of the property."
Pros of a VA supplemental loan
- A VA supplemental loan can be amortized for 30 years
- Can either take the VA supplemental loan as a second loan or add to your existing mortgage
- Can use up to 30 percent of the loan for non-fixtures that relate to the purpose of the loan. For example, you can get a new oven if you're redoing your kitchen, but not if you're updating the bathroom.
- Lenders can't increase your interest rate above what you currently have
Considerations of a VA supplemental loan
- Can't use on a loan that's been paid off or on non-VA loans
- You may have to wait longer for approval if you choose a different VA lender for your new loan
- Can't use the loan for non-necessary luxury items like a swimming pool
There are a number of home improvement and remodel finance options when you have a VA loan. Contact Freedom Mortgage and we'll help you sort through your VA loan options to finance your home improvements.