VA guidelines

VA Loan Answers: What Are “Eligible VA Loan Purposes?”

February 13, 2014

VA Loan Answers: What Are “Eligible VA Loan Purposes?”


In our last blog post we discussed the eligible purposes of a VA home loan. Many borrowers want to know if VA loans are available for home improvements, business concerns, undeveloped land or farm residences. Some of these purposes may be eligible for a VA loan, and some may not.

For example, in the case of farm loans, VA rules permit a loan for farm residences with the caveat that the loan is available, “To purchase a farm residence to be owned and occupied by the veteran as a home. If the loan includes the purchase of farmland, the farmland is appraised at its residential value only.” That’s according to VA Pamphlet 26-7, Chapter Three.

Chapter Three also says that VA loans can only be made for eligible purposes. It even includes a list of “ineligible loan purposes” which includes the following:

• Purchase of unimproved land with the intent to improve it at some future date (that is, the land purchase is not in conjunction with a construction loan).

• Purchase or construction of a dwelling for investment purposes.

• Purchase or construction of a combined residential and business property, unless,

− the property is primarily for residential purposes,
− there is not more than one business unit, and
− the nonresidential area does not exceed 25 percent of the total floor area.

• Purchase of more than one separate residential unit or lot unless the veteran will occupy one unit and there is evidence that:

− the residential units are unavailable separately,
− the residential units have a common owner,
− the residential units have been treated as one unit in the past, and
− the residential units are assessed as one unit, or
− partition is not practical, as when one unit serves the other(s) in some respect; for example, common approaches or driveways.

This is not necessarily an all-inclusive list, but it’s easy to see from these examples that the goal of the VA loan program is to give eligible borrowers an affordable way to purchase property intended for their own personal use. Talk to a loan officer about your VA home loan options to learn more.

Do you have questions about VA home loans? Ask us in the comments section. 

  1. Janet

    can you refiance a 40 acre farm with a house

    • Joe Wallace

      Is the original loan a VA mortgage?

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