VA Renovation Loan: The Home Improvement Loan For Veterans
Author:
Molly GraceJul 27, 2023
•8-minute read
Rocket Mortgage® does not offer VA renovation loans or Home Equity Lines Of Credit (HELOCs) at this time.
If you’ve been trying to buy a home, and are having trouble getting your offers accepted, you might be looking for alternatives to buying a move-in ready, single-family home. One route you might be considering is buying a fixer-upper and renovating into a like-new home that meets your and your family’s needs.
Home buyers who qualify for a Department of Veterans Affairs (VA) loan can also qualify for a VA renovation loan, which can be a useful option for those looking to purchase a property that isn’t quite move-in ready. These loans allow those who are eligible for a VA loan to use their mortgage loan proceeds to pay for repairs or improvements to the home, rolling both the purchase price and renovation costs into a single, affordable loan.
Let’s go over the basics of VA renovation loans, their pros and cons, and what other types of home improvement financing is available for those who aren’t able to secure a VA renovation loan.
What Is A VA Renovation Loan?
A VA renovation loan, sometimes called a VA rehab or reno loan, is a home loan that allows borrowers to include the cost of certain repairs or improvements in their loan amount.
This makes it possible for VA loan borrowers to purchase a home in need of repairs or upgrades without having to get a separate loan; rather, the repair costs and purchase price are rolled into a single loan with one monthly payment. These loans can also be used to refinance your current home loan.
How Is A VA Renovation Loan Different From A VA Loan?
VA renovation loans are VA loans and come with all of the same benefits and requirements that a standard VA loan does.
As with a normal, purchase-only VA loan, VA renovation loans allow borrowers to purchase a home with 0% down. There is a one-time-only funding fee that can be rolled into the loan along with closing costs and relatively low interest rates compared to other mortgage types.
But, because you’re also getting funds to pay for repairs, you’ll have to jump through some additional hoops to get approval for your proposed improvements. This will include getting quotes from contractors registered or willing to register with the VA and having a VA appraiser determine what the value of the property will be once the work is completed.