VA Home Improvement Loans
The VA home loan program was designed to make purchasing a home more accessible for active duty service members, veterans, and surviving spouses. The program offers money-saving benefits to those who qualify with the goal of making homeownership within reach for those who might not otherwise be able to access it. In this article, let’s look at some facts about VA Home Improvement Loans.
In addition to helpful benefits like no required down payment, no monthly mortgage insurance, and options for people with lower credit scores, the VA home loan program also allows you to renovate your existing home or purchase a fixer-upper and finance the cost of the renovations. These options are possible with a VA home improvement loan.
There are multiple VA home improvement loan options for those who qualify through VA cash-out refinances. When looking to renovate your current home or purchase a fixer-upper as your next home, HomePromise can help you navigate these complex financial decisions. Call HomePromise at 800-720-0250 to receive a free quote that details your accessibility to a VA home improvement loan.
100% VA Home Improvement Loans
When getting a VA home loan to purchase a home, sometimes the home has improvements that you’ll want to do after closing. Maybe you want to upgrade your kitchen or bathrooms. Maybe you want new carpets or a new roof. All of these items may be possible through a VA cash-out refinance if your home has increased in value after closing.
Alternatively, you may have lived in your home for years and need an addition for larger family size or want to do upgrades, alterations, and repairs. The VA cash-out refinance is the ideal way to get these home improvements done. Instead, if you choose a home equity line of credit (often called a HELOC) you may experience some risk of big increases in mortgage rates because most HELOCs have adjustable rates. Sometimes HELOC rates can rise above 20% so a fixed-rate VA cash-out loan is safer.
The key to doing VA cash-out refinances for home improvement is to make sure you work with one of the few lenders that allow for 100% cash-out refinances. A VA cash-out refinance for most lenders is limited to 90% of the value of your home which limits the amount of work you can do to improve your home.
At HomePromise, our maximum loan is 100% of the value of your home for a cash-out refinance. Call our VA lending experts to find out if you qualify for a 100% cash-out refinance at 800-720-0250.
VA Cash Out Home Improvement Loan Requirements
In order to qualify for a VA cash-out refinance to do home improvements, service members must meet the standard VA home loan requirements for service and provide their Certificate of Eligibility. If you do not currently have your Certificate of Eligibility (COE), call HomePromise at 800-720-0250 to talk to a VA expert who can get your COE for you.
The below chart details the service requirements that must be met in order to qualify for the VA home loan program:
|Type of Service
|Active Service During Peacetime
|Active Service During Wartime
|Length of Service
|Served for 181 days
|Served for 90 consecutive days
|Served for 6 or more years
When applying for a VA home improvement loan, you must also meet the credit score requirements of your lender. The VA loan program does allow for options for veterans and active duty service members with lower credit scores, but credit score requirements do vary from lender to lender. If you’re wondering what your credit score is and the mortgage you maybe be able to obtain with it, call HomePromise at 800-720-0250 to speak with our mortgage experts.
In addition to meeting the service requirements for the VA loan program and the credit requirements of your lender, the repairs to your home must also meet specific VA standards. Your home can’t be dilapidated or need repairs that affect the health and safety of the home. Those repairs have to be completed before closing. But you can draw cash out of the home at closing to pay contractors or pay off debts you may have accumulated by paying for needed repairs.
Minimum property requirements must be met to qualify for a VA cash-out refinance.
Understanding Minimum Property Requirements
Minimum property requirements (MPRs) were put in place to protect the value of the home itself and the health and safety of the buyer by identifying immediate threats present in the home. MPRs ensure that the property is move-in ready and meets the basic living needs a home should provide. MPRs are designed to identify a variety of issues that could affect the safety of the home as well as its value.
The below chart lists some of the minimum property requirements as determined by the Department of Veterans Affairs:
VA Home Improvement Loan Minimum Property Requirements
The home must:
The above-listed minimum home requirements are the basic necessities a home should provide. Having these requirements before purchasing or refinancing a home protects veterans, active service members, and their families from the added stress of purchasing a non-functioning home. It also helps protect lenders and the VA home loan program as a whole so it remains healthy for many generations to come.
A VA cash-out refinance can work as a VA rehab loan if your home needs significant work to be done but the home must meet minimum property standards by the time you close on your loan. The VA cash-out refinance can act as a home equity loan tapping the equity in your home with a new first mortgage for repairs and improvements. Note that the home has to be your primary residence to qualify for a VA cash-out refinance for home improvements.
VA Home Appraisal
A VA home appraisal confirms that all of the minimum property requirements are present in the home. The VA home appraisal must be completed by a qualified, independent VA home appraiser. The VA home appraisal is a different service than the home inspection. The appraiser is selected by the US Department of Veterans Affairs on each VA loan.
A home inspection is a thorough investigation of the home to help make buyers aware of any potential issues with the home. It’s a more in-depth review of the home that’s very important for protecting home buyers. A VA appraisal does not replace the need for a home inspection.
Home Improvement Loans for Disabled Veterans
Disabled veterans who need to remodel their current homes in order to make them accessible for themselves are eligible for special housing grants that help cover the cost of these expensive renovations.
There are a variety of benefits disabled veterans receive when obtaining a VA home loan. In addition to these benefits, disabled veterans may also qualify for specific grants that help cover the cost of making accessibility modifications to the home. There are two grants available for disabled veterans with a 100% service-connected disability rating from the VA: the Special Housing Adaptation (SHA) and the Specially Adapted Housing (SAH) grant.
If you are a disabled veteran who does not qualify for either of these grants, a VA cash-out refinance might be a great option for helping cover the cost of accessibility renovations to your home. To learn more about your options, call HomePromise at 800-720-0250 for a free quote. We will take the time to understand your unique circumstances, listen to your needs, and answer any questions you might have
More Details About VA Cash Out Home Improvement Loans
With a VA cash-out refinance you can use the money for any purpose, like home improvements and renovations of your choosing. With a VA cash-out refinance, your maximum loan amount with most VA lenders is 90% of your home’s current value. But, at HomePromise we allow you to tap 100% of the value of your home as a veteran or active duty member.
A VA cash-out refinance works by tapping into the equity you’ve earned and built over time in your home. In order to be able to take advantage of a VA cash-out refinance, you must owe less money on your mortgage than what your home is worth. In other words, you can’t be “upside down” on your mortgage meaning that your mortgage can’t be more than the value of your home.
The money available to those who qualify for a VA cash-out refinance can be used for a variety of purposes. The Department of Veteran Affairs does not regulate or set rules on what the cashout money can be used for. The money from a VA cash-out refinance could be used to pay off high-interest credit card debt, finance a wedding, pay for college, or put an addition on your home.
Discovering the untapped potential of the equity you’ve earned in your home can be exciting. As you’re choosing how to spend this money, keep in mind that the money you’re pulling out from your home’s equity will be refinanced into your mortgage. This means that you will be paying for it in the higher loan amount of your mortgage after the refinance is complete.
Here is an example of the numbers behind a potential VA cash-out refinance scenario:
|Total Amount Remaining on the Mortgage
|Appraised Value of the Home
|Equity Available Through a VA Cash Out Refinance
Note that in the scenario above you have to pay the VA funding fee and any closing costs out of the $55,000 available through a cash-out refinance. Lower closing costs help you keep as much of that $55,000 for yourself.
A great way to keep your closing costs low is through the HomePromise reduced origination fee of $590. Many VA lenders charge 1% of the loan amount as an origination fee. That would be $3,000 on a loan amount of $300,000. HomePromise charges only $590 regardless of the loan amount.
Discuss Your VA Home Improvement Loan with HomePromise
HomePromise is an approved lender with the U.S. Department of Veterans Affairs for providing VA home loans. We proudly offer convenient methods for applying for VA home loans, including online and over the phone.
To learn more about the ways you can take advantage of your home’s equity, call HomePromise at 800-720-0250. As a VA-approved lender we will help you understand your options and provide you with a free interest-rate quote
VA Debt Consolidation Loans & Military Debt Consolidation
Even with the best of intentions, bills can start to pile up. From unexpected medical bills to high interest credit cards, debt can happen to anyone. Other expenses like college tuition, delinquent taxes, and second mortgages can also cause financial stress. For veterans and military families currently experiencing financial difficulties, VA military debt consolidation loans can help.