How to apply for a VA Home Improvement Loan

If you’ve ever worked with the VA on anything, you know, there always seems to be a lot of hoops to jump through. Either to get what you want or find the information to get there. Applying for a VA Home Improvement Loan is no different. If you own a home and you’re looking to make a few improvements, there’s a lot you need to know when going through the VA. Here’s a list of what you need to know on how to apply for a VA Home Improvement Loan

What is a VA Home Improvement Loan?

A VA Home Improvement Loan is basically what it sounds like. You have a home, it needs improvements, and you need a loan to finance it all. However, it’s not nearly as easy as it sounds, and there are several qualification factors you need to consider first. Unfortunately, a VA Home Improvement Loan does not come without a VA Home Loan. So, if you want to do improvements, you must be purchasing your home through the VA and have your lender combine all the costs, including the repairs.  If you decided to do improvements after your purchase, you’ll have to look elsewhere.  If however, you’re planning to add energy-efficient upgrades, you can do this during your initial loan process or after.

View our top-rated VA Home Loan Lenders here! 

Are you thinking about getting a new heat pump? No problem, the energy-efficient loan will cover it. Were you thinking about adding thermal or storm doors and windows, the VA has you covered there too. What about a clock thermostat? You guessed it; the VA home improvement loan is your go-to! This specific loan also covers insulation, solar cooling and heating, and other various energy efficient modifications to your home, as long as it’s not more than $6,000.

If you’re thinking about doing some lavished remodeling to your home, the VA might not approve your loan. This doesn’t mean you can’t get the loan, it just means your repairs have to fit in within the community’s standards. Meaning, if you’ve purchased a standard, single-family home amongst other standard single-family homes, you won’t get approved for a home improvement loan to add in a million dollar pool.

Of course, for most of us, we’re probably not looking to install a million dollar pool, so you might not have to worry about this. However, you might still want to consider exactly what it is you want to do with your loan before you start all that paperwork. Simply put, your house has to qualify for the loan. If your house doesn’t meet the standard safety, security and habitability requirements, it better, and within 90 days of your purchase. If your home doesn’t meet the requirements, you could get approved for improvements costs to help you meet the standards, so long as it doesn’t cause your loan to go beyond the county’s loan limit.

What if your home doesn’t meet those standards? Well, you can still get the loan if you can meet it within those 90 days, but you can’t do the work yourself. Meaning, if your plan was to get the loan for materials and then do all the work yourself—because you’ve been watching a lot of the DIY Network and HGTV lately—you better think twice because it’s not allowed! What’s the point of this rule? Really, what’s the point of any rule—to protect you. But, don’t’ get too upset, the VA looks at it as a way to let the buyer retain their right to sue.

If all these rules don’t hurt your feelings just a little, maybe this 2% construction fee will. The VA loan requires a funding fee—unless you qualify for an exemption—but if you’re planning to purchase a loan for repairs or alterations to your home, you should plan on the possibility of paying up to 2% in construction fees on top of your 1.25-3.3% funding fee.

Who Qualifies for a VA Home Improvement Loan?

Who qualifies for a VA Home Improvement Loan is no different than who qualifies for a VA Loan, the difference isn’t who, it’s what qualifies. Therefore, as long as you are currently or where ever a part of any US Military component or a surviving spouse, you qualify to apply for the loan. Whether you actually get the loan is a completely different story.

If you qualify for VA-guaranteed financing, this is what you can do with it:

  • Buy a home
  • Buy a townhouse (if it’s in a VA approved location)
  • Buy a condominium unit (if it’s in a VA approved location)
  • Repair, alter or improve a home (that was purchased with a VA Home Loan)
  • Simultaneously purchase and improve a home
  • Energy efficient improvement
  • Buy a mobile home and/or lot
  • Buy and improve a lot where you want to place a mobile home (if you own and occupy it)

What can I get with a VA Home Improvement Loan?

While the VA isn’t strict on what you can and can’t do with their Home Improvement Loan. The VA approves roof and floor repairs, bath, and kitchen remodels, and even HVAC. These all tend to be high-cost repairs, but with a VA Home Improvement Loan, you can finance each of them. Of course, this isn’t a complete list of everything you can utilize this loan for. But if it does anything to save energy, it most likely qualifies.

What if you don’t qualify?

If you don’t qualify for a VA Home Improvement loan, because you’re either planning on making extensive repairs after you closed without telling the VA or want to purchase more lavished materials, then you’ll be forced to look elsewhere for your loan needs. If this is the case, don’t worry; there are a lot of other great options for you out there to help you in the process, such as our top VA Home Loan Lenders.

Top VA Home Loan Lenders

  1. Veteran’s United
  2. JG Wentworth
  3. Quicken Loans
  4. Lending Tree 
  5. NASB
  6. Cross Country
  7. Rocket Mortgage

Home Improvements you can add to your VA Loan

If you’re looking for ways to save money via energy efficiency, you might just be able to add it to your VA Loan. The government loves that you want to reduce energy consumption, and if it’s Energy Star approved, then it’s government approved.

If you need to replace your appliances, such as your dishwasher, refrigerator, oven, washer, dryer, AC unit, hot water heater, etc. Chances are, you can add it to your VA loan because it’s going to save energy and in turn, your money.

Does the VA offer a Rehab Loan?

If your home needs more than a few improvements and something closer to a complete transformation, then you’ll need to look for a rehab loan. Unfortunately, this isn’t something the VA provides. The VA requires you to either buy a home that is move-in ready or will be if you’re using a construction loan. If your home needs deep, non-cosmetic repairs, you don’t qualify for the VA’s Home Improvement Loan. This means that gorgeous 1930’s Farm House you bought with foundation issues won’t be covered through the VA. If this is you, there are other options out there.

The FHA 203K loan is a government insured program. It’s perfect for any purchase that requires extensive repairs. This particular loan also covers unfinished construction, flipping (the home must be occupied), foreclosures, and condemned or abandoned property.

What’s the best loan for Home Improvements?

The loan that is best for home improvements depends on what type of improvements you want to make. If you’re planning to make a cosmetic improvement, the VA Home Improvement Loan may be perfect for you. Are you planning to make non-cosmetic repairs? Maybe the FHA 203K loan is perfect for you. The type of loan also depends on how much you need. If you’re planning to make energy efficient changes, the VA will lend you up to $6,000, but any more than that you’ll have to look elsewhere. If you want to make more general repairs or improvements, but the total loan cost is going to be more than the county’s loan limit, you’ll have to look for another loan option as well.

What is a VA Construction Loan?

The VA also offers something called a construction loan. This loan is meant to be used when you want to build a new home. The loan also comes with a lot of huge perks. For instance, the VA doesn’t require you to start paying on your home until the home is move-in ready. You’re also required to have a detailed plan on each step of the home’s construction, meaning you’ll have estimated dates on when every process of the home should be done.

If that’s not enough for you, you can also get your land, construction, and mortgage combined into one single payment, while still paying zero down, if you qualify.

What are the different types of VA Loans? 

Before repairing a home, or buying one, you may be wondering exactly what types of VA loans are out there. More specifically, you may want to know what you’re allowed to buy with your loan. Often, people in the market for a house want to know:

  • Can you use a VA Loan to buy land and build a house?
  • Does the VA finance land only?
  • Can you use a VA Loan to buy a foreclosure?
  • Can you use a VA Loan to buy a manufactured home?
  • Can you buy a farm with a VA Loan?

Each of these questions comes with a lot of specification, so we’ll address them individually.

  1. Can you use a VA Loan to buy land and build a house?

The VA has strict rules about buying land when using their home loan. However, if you’re planning to put a house on the land, there generally isn’t an issue. You can build a new home or put a pre-fabricated home on the land, so long as you plan to occupy it within a reasonable timeframe.

  1. Does the VA finance land only?

The big thing with the VA is occupancy. You can’t buy a home with a VA loan and not occupy it. You can’t buy a house that you can’t move into within 90 days because deep repairs are required. Therefore, you can’t generally buy land that’s going to go unoccupied indefinitely. Which unfortunately means you can’t just buy 100 acres of land to hunt on but not live on.

  1. Can you use a VA Loan to buy a foreclosure?

As long as all the VA guidelines are met, buying a foreclosed home should not be an issue with the VA. As usual, buying a foreclosed home is much more time consuming than buying a house that is buyer ready, but that doesn’t mean the VA won’t let you use their home loan to buy it.

  1. Can you use a VA Loan to buy a manufactured home?

Simple answer, yes you can use a VA Loan to buy a manufactured home. However, it’s not nearly that straightforward. If you want to buy a manufactured home, you first have to make sure your home is listed as actual property, otherwise, your home could be considered as a vehicle or personal property, which the VA does not finance.

  1. Can you buy a farm with a VA Loan?

Buying a farm is not a simple yes from the VA. According to the VA’s standards, you have to buy a farm that can also be occupied. This means you can’t have a house on one piece of property, and a mile down the road have a farm on a completely separate claim. However, if you do buy farmland you will live on, you’re not required to do any real farming on it—but what’s the point in that? If however, you do plan to farm your land and it be your primary source of income, you’ll have to prove to your lender that it’s guaranteed income—basically, you’ll have to be a successful farmer. If it won’t be your primary source of income, then you’re good and it doesn’t have to be considered in your loan application.

How to apply

You’ve finally made it through all the research; you’re basically an expert on all VA Home Loan policies. Now it’s finally time to start applying for your loan. Your first step is to find a lender who does VA Home Loans, which isn’t that hard. Most lenders have all the documentation you need in order to apply for the loan, meaning you just need to get your Certificate of Eligibility (COE). This simply confirms you’re eligible to utilize a VA Home Loan. You’ll also need copies of your employment history for the past two years, your banking information and other recently closed depts, and obligations. If you have any returned or bounced checks, or income received outside of your employment, you’ll have to provide a letter of reasoning. Applying for the loan is actually quite easy; it’s dealing with the home inspections and sellers not wanting to meet VA standards that can be frustrating.

After that’s all done, and you’ve been living in your house for some time, you may decide to apply for a VA Home Improvement Loan. Keep in mind this is a second loan. However, it will be rolled into your original VA loan, so you’ll still have only one monthly payment. If you want to get approved for this loan, you’ll have to be willing to provide some documentation. You must show proof that whatever you want to repair meets the VA’s standards. This means providing the names of contractors and how much it’s going to cost you. After it’s all said and done, the VA then sends a representative out to your house, making sure everything meets their guidelines.

VA Loan Guide

We understand buying a house using a VA loan comes with a lot of rules and regulations. But, that doesn’t mean it needs to be a difficult process. If you have any other questions in regards to the VA Home Loan process, check out our VA Loan Guide. If you have questions about fee limits, you can also read more about that here. And never be afraid to call your local lender, they usually have the resources and contacts you’ll need, answer any of your questions, and get you started with the VA Home Loan process.

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