Home loans for veterans, or VA loans, generally have high standards regarding the condition of a property that a veteran is looking to purchase. In light of that fact, coupled with our low-inventory market, the VA has come out with a new loan product that now allows a veteran to purchase a property and do renovations on it: the VA rehabilitation loan.
This rehabilitation loan is similar to an FHA loan, but there are a few key differences. With this loan type, a veteran can purchase a property as is and have the funds to do certain repairs, including the furnace, windows, roofing, kitchen, bathroom, and the like.
The veteran can get a 100% loan-to-value as long as the appraisal comes out to the property’s market value. For example, suppose a property was purchased for $100,000 and the veteran had plans to put $75,000 into the improvement of the home and a 10% contingency reserve (a financial cushion against unanticipated expenses). Unlike FHA loans, the VA rehabilitation loan does not require a contingency reserve (however, your lender may require that you have one).
If, say, the property appraises for $190,000, then that entire project can be financed at 100% down. The VA will also come in and do inspections, and draws will go to the contractor so that the project is completed on a three- or four-draw basis.
This is an excellent program for veterans trying to purchase homes. In our current market, there are many multiple-offer situations, which VA loan-buyers often get squeezed out of. This program can assist you in finding your dream home and putting it together in the way that you desire.
If you have any questions about the VA rehabilitation loan, don’t hesitate to reach out to me. I’d love to discuss this awesome program in further detail.