VA Loans For Home Repairs?
One common question we receive is in regards to the possible availability of VA loans for home repair. Is it possible for a borrower to apply for a VA loan in order to make home repairs or upgrades to the home?
There are several ways this can be done:
- VA cash-out refinancing.
- The VA Energy Efficient Mortgage at the time of the initial home loan or refinance loan.
- The VA loan for alteration and repair.
According to Chapter Seven of VA Pamphlet 26-7, “VA may guarantee a loan for alteration and repair of a residence already owned by the veteran and occupied as a home, or made in conjunction with a purchase loan on the property.”
The VA rules for these types of loans include the following:
- The alterations and repairs must be those ordinarily found on similar property of comparable value in the community.
- The cost of alterations and repairs may be included in a loan for the purchase of improved property to the extent that their value supports the loan amount.
The VA loan rule book makes provisions for this type of loan. However, there is one very important aspect of the home repair loan rules a borrower should understand. These loans would be available only from participating lenders. A VA lender may choose not to offer such loans, so if your chosen lender decides not to offer these loans you may need to search for a different financial institution.
Borrowers will be required to go through the usual credit check, though in cases like these an appraisal may not be necessary, it would be at the discretion of the lender.
There is also another type of VA loan called a Supplemental Loan, described by the VA as “a loan for the alteration, improvement, or repair of a residential property.” These loans would also be available from a lender that chooses to offer them.