Due to COVID-19 guideline changes – renovation loan products are temporarily restricted. Contact us for details.
Military veteran buyers have access to possibly one of the best loans in the US. The VA Renovation Loan provides very affordable financing and typically, it is a no money down purchase.
Just imagine this: A Veteran finds a home in the perfect neighborhood within their desired school district. The home has good bones, but the roof needs replacing and the kitchen is outdated. This is bad news for VA Loan approval. A bad roof, missing HVAC, or peeling paint will cause issues on the VA appraisal. In this case, the Veteran buyer would need to look for another house. This scenario is a prime example of how a VA Renovation Loan could save the day.
Breaking News! Now, Unlimited Nonstructural Renovations Allowed.
VA Renovation Loan Benefits
You heard right! There is a VA loan that allows for a qualifying Veteran, service member, or qualified surviving spouse to finance home improvements. Normally, a Real Estate Agent would steer clear of fixer upper homes for Veteran buyers because of the VA appraisal requirements. However, don’t blame the agent because there aren’t many VA Renovation Loan lenders out there. Luckily, OVM Financial does offer this beneficial rehab loan product.
If you think about it, most of the time it is hard for a VA buyer to fix up their new home. A traditional VA loan could finance 100% of the purchase price. Borrowing 100% of the price means there is probably not an option to obtain a home equity line for improvements. Then, the only other option may be to pay out of pocket or get a smaller, unsecured loan at a higher interest rate. Otherwise, the homeowners will just have to wait until they can afford to pay for the home improvements. That is why a VA renovation loan is such a great option.
Reasons To Choose A VA Purchase Rehab Loan
- Keep funds in the bank
- Buy the home you desire and include renovations
- Put your mark on the home right away
- Get a good deal on the home buying it as is
- Potentially benefit from a no-down-payment option
VA Renovation Loan Guidelines
This has to be sounding pretty good for VA borrowers, Realtors®, and even the sellers. So, you have to be wondering about the details. Is it hard to get? Not really. The underwriting guidelines are very similar to traditional VA requirements. Here are some of the primary details:
- Primary residence only
- 100% Loan to Value using “as completed value”
- 640 Minimum credit score
- Up to 75,000 in renovation **
- Includes minor and non-structural repairs
- Accessibility upgrades allowed (ramps, rails, etc.)
- 1-2 Unit Properties
- Purchase or Refinance
- Cosmetic repairs are allowed
- NO Consultant required unless over $50,000 in renovation total
** $75,000 includes renovation cost, contingency reserves, and fees
Fixer Upper Home Solution for Veterans
If you are a Veteran buyer or a Realtor®, just think of all of the homes you passed by that could have been perfect with a little work! Now, with being able to finance home improvements into one VA loan using the “subject to” or “as completed value,” it opens up many possibilities.
With that said, when touring homes, make sure to check out the ones that need some TLC too.
VA Appraisal Required Repairs Causing a Problem?
You may have caught this already and if you are a Realtor®, but the next time there are VA appraisal required repairs that the seller will not fix, contact your OVM Financial loan officer. Our VA renovation loan allows the purchase to close and the repairs to be completed after closing. The seller is happy, the buyer is able to get the desired home with the required repairs completed and maybe even some extra improvements. Plus, the Realtor® is able to find a solution for all parties.
Renovation Loan Options Other Than VA
Obviously, this product is awesome. But, what if the buyer isn’t a Veteran or the improvements required are structural or total more than the VA allowed amount? Luckily, we have other renovation loan options. FHA offers the 203k which is divided between limited and full 203k’s. Limited 203k loans are very similar to the above VA renovation loans. While the full 203k allows for structural renovation and larger loan amounts.
Then there are the conventional renovation loans which allow for improvements on primary, secondary, and investment properties. This is called the Fannie Mae Homestyle Renovation loan. Similar to the full 203k, this allows for larger rehab projects including structural improvements. Below is a chart which best compares each renovation loan type side by side.
Download Our Renovation Comparison Chart
Our comparison chart helps to compare the multiple options and requirements for each type of renovation loan. Complete the following information and we’ll deliver the chart to your inbox.