The VA Renovation Loan, Also Known As, The VA Reno!
Updated For 2019 With The Highest Limit of $50,000.00 For Home Updates.
The VA Nationwide Rehab loan has a maximum allowable repair limit of $50,000; however, some of these costs must be maintained for overage allowance. Meaning if your repairs are of a non-structural and non-luxury upgrade nature and are limited to $45,000 in costs then this is the product you want to obtain.
Repairs are rolled into one loan is easier to qualify for than a 2nd mortgage, also known as a home equity loan, and comes with one low fixed rate mortgage.
Our VA Renovation program allows for product terms of 10, 15, 20, 25, and 30-year terms, with interest rates that are lower than both the FHA, Homestyle® and USDA programs.
Unlike other renovation loan programs such as the FHA 203k, Fannie Mae Homestyle® and USDA Repair Escrow, this VA program comes with no mortgage insurance (MI) requirement on loan. So if you are a Veteran, this is the product you want to choose over the other options available if you do not need to complete any structural repairs.
For Purchase loans, this product can be used on existing built homes, foreclosures and short sales that are in need of repair and design updates, as well as minor updates to existing homes for purchase or refinancing. The repairs can be completed by only 1 General Contractor (GC) which may be able to use multiple subcontractors if required underneath the GC.
The borrower cannot complete any of the repairs themselves or act as the general contractor, and ALL improvements must be achieved in a four-month term. The work must begin within 30 days of the closing of the loan, and must not cease for a period longer than 30 days. The GC must submit a qualifying bid outlining all work to be completed within the 120 day period.
Draws and disbursements are determined based upon the percentage of work completed, and no mortgage payment reserve can be financed in the property. Additionally, the property cannot be vacant for more than 15 days. There is a required 15% contingency reserve required on the VA renovation loan for any overages or miscalculations in repairs.
Eligible improvement types are: Eliminating health and safety risks, connecting to public water & sewer systems, repairing or replacing plumbing, heating, AC, electrical systems, making changes for improved functionality and modernization, new roof as long as structural integrity is intact, siding, gutters and downspouts, energy conservation improvements, improving accessibility for persons with disabilities, repairing fencing, walkways and driveways, new refrigerator, cooktop, oven, dishwasher, built-in microwave, washer and dryer, repairing or removing an existing in-ground swimming pool, installing, repairing or replacing exterior decks, patios, or porches, covering lead-based paint issues.
Ineligible improvements that are structural or considered luxury are not allowed. These would be repairing foundation issues, oil tanks (repair, removal, remediation), any repair/installation for private water systems –(Wells), any repair/installation private waste management system (Septic Systems, Lagoon, Cesspools, Pits, etc.), mold remediation, moving another structure to the site or room additions to exterior of the property, landscaping site improvements, new swimming pools, outdoor saunas, whirlpools, or bathhouses, tennis or basketball courts, satellite dishes, barbeque pits, outdoor fireplaces or hearths. Additionally, tree-surgery is not allowed unless it endangers existing improvements to the property. Also, any repair completed by self-help, “do it yourself,” or that takes more than four months to finish is not eligible. If the scope of work requires more than three draws per specialized contractor or the proposed repairs/improvements need detailed plans, engineering, or architectural exhibits.
Eligible property types are a bit different for VA than its FHA counterpart. We allow renovations on all eligible singlewide, doublewide, triple-wide manufactured homes, modular homes, and single family homes only.
Ineligible property types are 2, 3, or 4 unit properties, condos, demolished or razed homes, relocated structures, mixed-use properties, commercial properties, co-op properties, investment property or mobile homes on leased land.
Restricted states based on permit requirements: For Both Purchase & Refinance: BuildBuyRefi restricts availability in the following states due to longer times to obtain permits and inspections. Except for Hawaii, if no licenses are required for the proposed work or the borrower can get a permit before closing, and inspectors availability is not an issue. BuildBuyRefi can make an exception on a case-by-case basis. (California, District of Columbia (DC), Hawaii*, Illinois, Massachusetts, New Jersey, New York, Oregon, Washington.)
There are specific requirements of the General Contractor, Insurance and Liability Requirements, Appraisal Requirements, Bid Requirements, Inspection, and Disbursement Requirements, and certain fees are allowed to be rolled into the closing. You will want to discuss these additional requirements with your banker once you have decided you are ready to move forward. Additionally, since these loans are treated as New Purchase or Rate and Term Refinance loans, the maximum allowable cash back to the borrower cannot exceed $500.00 except in the state of Texas where the amount is $0.
If you are ready to get started on your VA Reno Loan today, just complete the form to the right or call us to speak directly. We’re eager to help you with your loan and thank you for your service to our country!
Should you require repairs more than $50,000, or need to have renovation completed on second homes, or investment property, you will want to look at our FHA 203k Standard, or FNMA Homestyle® renovations and view our renovation loan guide here which was updated for 2019.
5 Star USDA Lender Reviews That WOW!
Richie, OK... so you've officially done something I've never seen in 22+ years selling real estate. Closed a VA Loan on 224 Acres, with a Manufactured Home. CONGRATULATIONS! and THANK YOU!!! Admittedly, I was skeptical (more like pessimistic) when James told me you were going to get this VA Loan completed. And I had many doubts along the way, because I'd seen so many VA Lenders fall flat on their faces, just before the Closing. BUT... You got the Job DONE! Occasionally, I find someone out there who has done an Outstanding Job, helping my Clients... and You are one of these! I'm now officially a FAN of You and Your Work. I would be honored to promote you and your services to other Agents within our company, and I intend to do so. I will call you when I've caught up on my work a bit... and learn more about how I can do my job better on the next VA transaction. ~Tom K. Realtor
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