What Is A VA Renovation Loan?

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Let’s explore the pros and cons of a VA renovation mortgage for veterans.

Pros:

  1. Low-Cost Financing: VA renovation loans are VA loans, which means they come with several benefits, including low interest rates, 0% down payment, and no mortgage insurance12.
  2. Single Loan for Purchase and Repairs: With a VA renovation loan, you can roll both the purchase price of the home and the costs of repairs or renovations into a single loan. This simplifies the financing process and results in one monthly payment.
  3. No Separate Down Payment for Repairs: Unlike traditional loans, where you might need additional funds for repairs, VA renovation loans allow you to include repair costs in the loan amount without requiring a separate down payment.
  4. Flexible Property Options: You can use VA renovation loans to purchase fixer-uppers or homes in need of extra care, expanding your options in the housing market.

Cons:

  1. Limited Lender Availability: Finding lenders that offer VA renovation loans can be challenging. Not all lenders provide this type of financing but Stonebridge Mortgage Group does!
  2. Additional Approval Steps: To get approval for proposed improvements, you’ll need to provide quotes from contractors registered with the VA. Additionally, a VA appraiser will assess the property’s value after repairs are completed.
  3. Property Value Constraints: The as-completed value (projected market value after repairs) must be the lesser of the total acquisition cost or the value determined by the VA appraiser. This limitation affects the loan amount you can finance2.

Remember that VA renovation loans are a unique option for eligible Veterans and service members, but it’s essential to weigh the pros and cons based on your specific situation.

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