VA Home Improvement Loans: 9 Things To Know

VA Home Improvement Loans 9 Things To Know

VA Home Improvement Loans: 9 Things To Know

Understanding how VA Loans for Home Improvement can help you

Every house eventually needs some work- no matter how ‘perfect’ it may be when you buy it. And it’s not necessary to seek a conventional loan to do this, there is a VA loan called a “supplemental loan” that allows you to borrow money specifically for home improvement on the property you bought with your VA home loan entitlement. Some people informally refer to this as a VA renovation loan.

You can even be considered for this VA home improvement loan if you have no remaining VA loan entitlement in certain cases. According to VA Pamphlet 26-7, the VA Lender’s Handbook (Chapter 7):

“If the Veteran has no available entitlement, VA can still guarantee the supplemental loan provided the lender is the holder of the Veteran’s existing loan and the loans are to be consolidated.”

There are some considerations to keep in mind when applying for a VA Supplemental Loan (the term “VA home improvement loan” is sometimes used interchangeably to describe these home repair loans for veterans):

    • Only for VA Loans: Those who own a home purchased with a VA Mortgage or those applying for a supplemental loan in conjunction with a VA mortgage to buy the home.
    • On-time payments: VA loans for home improvement require the borrower to be current on the existing VA loan (assuming the supplemental loan isn’t applied for in conjunction with a VA mortgage loan to purchase).
    • Other uses? VA loan rules in the VA Lender’s Handbook include a very brief mention of another use for this type of VA loan. The loan rules in this area state that, as mentioned above, “…the existing loan must be current with respect to taxes, insurance, and amortized payments, and must not otherwise be in default unless a primary purpose of the supplemental loan is to improve the ability of the borrower to maintain the loan obligation.”
    • Interest rate restriction: VA loan rules state clearly that a home improvement loan for veterans / supplemental loan, “can never result in any increase in the rate of interest on the existing loan” (emphasis ours) but be advised, the same section of the VA rulebook also states, “A supplemental loan to be written at a higher rate of interest than that payable on the existing loan must be evidenced by a separate note from the existing loan.” Your supplemental loan / VA home renovation loan CAN feature a higher rate than the original mortgage note under the right conditions.
    • 30 year loan term?:  VA supplemental loans for home improvement have loan terms of five years if not amortized, and 30 years if amortized according to Chapter 7 of VA Pamphlet 26-7.
    • Use these loans for addressing real problems in your home: By definition, these loans are for making improvements in your property’s basic livability. Keep in mind the home improvement loan for veterans rule in the VA Lender’s Handbook which states that no more than 30% of the supplemental loan may be used for “maintenance, replacement, improvement, repair, or acquisition of non-fixtures or quasi-fixtures such as refrigeration, cooking, washing, and heating equipment”.

Contact a participating VA lender to learn how to apply for a VA Improvement Loan Some borrowers may ask why they shouldn’t just apply for a VA home equity loan instead, but no such program backed by the Department of Veterans Affairs currently exists outside of VA Cash-Out Refinancing.

  • Home Extensions Auckland
    Posted at 11:12h, 14 September Reply

    The blog helps you to know about the 9 things to know regarding home improvement loans. These are must read for all . This article is a good one to look at. You will get best review over here and would suggest others too. Great blog indeed, will visit again future to read more!!

  • Gumesindo Gonzales
    Posted at 11:11h, 24 September Reply

    How do I apply for home improvement for new roof and adding a washroom to house.

  • Wendall J Dowling
    Posted at 21:09h, 27 August Reply

    If I own my home but need a home improvement loan to replace a central heat and air unit does the VA have a loan for that

  • George Callas
    Posted at 02:06h, 02 August Reply

    Tried printing this info but it won’t cooperate.

  • Garth Moreau
    Posted at 18:19h, 20 October Reply

    I am in a FEMA area in regards to Hurricane Irma. I know some lending companies are allowing customers to skip a couple of months to recover from the expenses of a natural disaster such as this. My lender is allowing 30/60/90 day grace periods but requires all payments to be paid in full at the end of 90 days. In other words, if you skip 1 payment, you must make 2 payments in month 4. If you skip 2 payments, you must make 2 payments in month 4 AND 2 payments in month 5.
    I have spoken with the lender and they will work with you on a payment arrangement but can not guarantee that my credit will be intact after the arrangements.
    Can you please provide suggestions or other assistance that might be useful?

    Thank you for the help,

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