VA Renovation Loan: An Overview
This article provides an overview of VA renovation loan features, benefits, eligibility, and more. Learn more to determine if this loan option is right for you.
What is a VA Renovation Loan?
A VA Renovation Loan is a type of mortgage designed to help Veterans and Service Members finance the purchase of a new home, or to refinance an existing home and make needed repairs, renovations, or improvements. VA Renovation Loans are available for both primary and secondary residences, and are backed by the U.S. Department of Veterans Affairs.
How Does a VA Renovation Loan Work?
VA Renovation loans are available up to the maximum conforming loan limit in each county and are designed to help Veterans finance home improvements and repairs. The loan proceeds can be used for repairs such as remodeling a kitchen or bathroom, replacing flooring or windows, making energy-efficient upgrades, and more. The loan can also be used to pay for closing costs and prepaid items such as homeowners insurance.
VA Renovation loans are usually a part of an overall VA loan package that includes the VA funding fee, and other closing costs. The VA funding fee is a percentage of the loan amount and is used to cover the cost of VA-guaranteed loans for Veterans.
Benefits of a VA Renovation Loan
VA Renovation Loans provide Veterans with a number of advantages. For starters, VA Renovation loans offer lower interest rates than conventional loans, as well as lower closing costs. This allows Veterans to finance home improvements at a lower cost. Additionally, VA Renovation loans may be used to finance improvements to existing primary residences, secondary residences, and even investment properties.
Unlike conventional loans, VA Renovation Loans do not require an appraisal to determine the value of the home, and there is no limit to the amount of renovations that can be made with the loan proceeds. Lastly, VA Renovation Loans can be combined with an Energy Efficient Mortgage, which can allow Veterans to finance energy-efficient improvements and make their home more efficient.
Conclusion
VA Renovation Loans are a great option for Veterans and Service Members who are looking to purchase a new home, or refinance their existing home and make necessary repairs. These loans offer lower interest rates and closing costs, and can be used to finance improvements to all types of residences. VA Renovation Loans also come with certain advantages, such as no appraisal requirements and the ability to combine with an Energy Efficient Mortgage. For these reasons, VA Renovation Loans can be an excellent option for individuals looking to fund improvements to their homes.