What Can I Buy With a VA Loan?
One of the most frequently asked questions about the VA home loan program is: “What can I buy with a VA loan?” The answer may surprise you. Eligible borrowers can purchase, build, or improve a wide array of properties with their VA loan benefit, as long as the homes meet the Dept. of Veterans Affairs’ requirements.
Options for a VA purchase home loan include single-family homes, townhomes, condos in VA-approved developments, multi-family dwellings containing up to four single-family units (with one occupied by owner), certain manufactured homes and lots, and even rural farmhouses.
Check Owner-Occupancy Requirements
Regardless of the type of property you buy with your VA home loan benefit, it’s essential to know about owner-occupancy requirements. Before your loan closes, you must certify the intent to occupy the new home as your primary residence — usually 60 days after closing. However, the VA understands that it may not be possible to move into your new home as quickly as you’d like. Perhaps you’re an active-duty service member on deployment, or you’re making home improvements that will take more than 60 days. For these cases and other scenarios, an occupancy extension is possible. It is also possible for a dependent of an Active Duty Service Member to fulfill the occupancy rule under the Servicemembers Civil Relief Act (SCR).
A mortgage lender who specializes in VA loans will be able to educate borrowers about VA owner-occupancy requirements and extension options.
Consider Existing Construction
According to the VA, the term “existing construction” encompasses single- or multi-family homes that have been fully complete for at least one year, previously owner-occupied, and meet the VA’s minimum property requirements (MPRs). MPRs protect the investment of the military borrower and lender. An appraiser will be appointed by the VA to check that the home is safe, structurally sound, and sanitary.
Think About New Construction
Maybe you’ve heard that VA home loans don’t encompass new construction. While landing VA financing for new builds can be more challenging, they are indeed eligible to buy with a VA home loan. Finding a lender who is willing to take on the financial risk during construction is one reason why eligible service members and Veterans think it’s not possible to use their benefits for this purpose.
The VA considers “new construction” as a 100%-complete home (including your customizations, such as appliances, countertops, and carpeting), built within the last year and never before owner-occupied.
When using your VA loan benefit, a home is eligible if:
- It has a one-year builder’s warranty, or
- It’s enrolled in a HUD-accepted, ten-year insured, protection plan, or
- You are the general contractor of a new home for your own occupancy
- The builder is registered with the Department of Veterans Affairs
Check with your lender to see if they can help you obtain financing for the construction phase, and then help you use your VA home loan benefits once it is complete.
Purchase and Improve a Home at the Same Time
If you have your eye on a home that needs a few upgrades, it will most likely be eligible for a VA home loan. However, since the property must meet MPRs to be eligible, you won’t be permitted to purchase a total fixer-upper with a VA loan. In essence, the home cannot be unfit or hazardous to live in at the time of purchase — even if you promise to fix it up.
To simultaneously purchase and improve a home, it may be more advantageous to take out a separate construction loan to make your improvements. Then, when you have new granite countertops and a garage twice its original size, you can have your home reappraised before rolling your construction loan into a new VA refinance loan. But keep in mind, the clock is ticking during the remodel, and you may need an occupancy extension beyond the standard 60 days your home may be vacant after your loan closes.
Disabled Veterans may be able to utilize grants offered by the VA to adapt their home to their specific needs. The Specially Adapted Housing Grant (SAH Grant) and the Special Home Adaptation (SHA) Grant. Both provide Veterans with certain service-connected disabilities funds to live more independently. The Dept. of Veterans Affairs can provide more information.
Buy a Multi-Family Home
You can even use a VA loan to buy multi-family rental property (containing up to four units) if you occupy one of the units as your primary residence. You may rent out the remaining unit(s). If you meet specific requirements, you can even declare up to 75 percent of the rental income you expect to earn to help qualify for your VA loan.
Buy a Manufactured Home
Manufactured homes that are eligible for purchase using a VA home loan must meet two main criteria, aside from the MPRs. First, the state in which it is located must consider it real estate. Second, it must be permanently affixed to a foundation. Again, a VA-approved and assigned appraiser must deem the property eligible prior to VA home loan qualification.
Take Advantage of One Benefit, Many Uses
So, if you thought that you could buy only one type of home with a VA loan, think again. For additional information on the basics of VA loans, check out more articles in the Learning Center.
