(708) 887-8880

VA Renovation Loan 

What is a VA Renovation Loan?

A VA Renovation Loan is a specialized mortgage product that allows eligible veterans, active-duty service members, and surviving spouses to purchase or refinance a home while rolling the costs of necessary renovations or repairs into the loan. These loans combine the benefits of the VA home loan program, such as no down payment and competitive interest rates, with the flexibility to finance property improvements. VA Renovation Loans are backed by the U.S. Department of Veterans Affairs and are designed to help borrowers transform a property into their dream home without the need for a separate renovation loan.



Key Features of a VA Renovation Loan:

1. No Down Payment 

  •  Borrowers can finance up to 100% of the home's purchase price and renovation costs, provided the total loan amount doesn't exceed the VA's loan limits. 

2. Low Interest Rates 

  • VA Renovation Loans offer competitive rates, making it an affordable option for financing repairs or upgrades. 

3. Flexible Renovation Uses 

  • Funds can be used for various improvements, including modernizing kitchens, repairing roofs, upgrading plumbing or electrical systems, and making the home more energy-efficient. 

4. No Private Mortgage Insurance (PMI) 

  • Borrowers save on monthly costs because VA loans do not require PMI, even with zero down payment. 

5. Streamlined Process 

  • The loan covers both the home's purchase or refinance and the cost of renovations, eliminating the need for multiple loans. 

6. Customizable Loan Terms 

  • Borrowers can choose fixed or adjustable-rate options, depending on their financial goals. 

7. VA Guarantee 

  • As with all VA loans, these are partially guaranteed by the VA, reducing risk for lenders and allowing for more favorable terms for borrowers.  


Qualifications for a VA Renovation Loan

1. Eligible Borrowers

  • Veterans, active-duty service members, members of the National Guard or Reserves, and surviving spouses (if not remarried).

2. Certificate of Eligibility (COE)

  • Proof of VA loan eligibility is required and can be obtained through the Department of Veterans Affairs or your lender.

3. Credit Requirements

  • While the VA doesn't set a minimum credit score, most lenders typically look for a credit score of 620 or higher.

4. Property Eligibility

  • The home must be used as the borrower's primary residence. It can be a single-family home, townhouse, or condo that meets VA standards.

5. Renovation Requirements

  • Renovations must be completed by a VA-approved contractor and meet VA appraisal standards upon completion. Cosmetic upgrades or luxury improvements (e.g., swimming pools) may not be eligible.

6. Debt-to-Income Ratio (DTI)

  • A reasonable DTI ratio (usually under 41%) ensures the borrower can comfortably handle mortgage payments.

7. Sufficient Income

  • Borrowers must show stable, reliable income to cover loan payments and living expenses