VA Home Improvement Loan

This Old House
The Veterans Administration (VA) offers veterans and active duty service members some awesome opportunities to make their homes more comfortable, more valuable and more energy-efficient. VA Home Improvement Loans are guaranteed by the federal government and are available through lenders who offer home upgrade financing.
Not Really a Government Loan
Getting a VA Home Improvement Loan is not really getting a loan from the Veterans Administration. Neither the VA nor the federal government is a bank. They do guarantee full repayment of the loan, though. This takes the risk factor out of the loan for the lender and they are usually willing to offer very reasonable interest rates on such loans.
Advantages of a VA Home Improvement Loan
Traditional lending institutions such as banks and credit unions have raised their lending benchmarks considerably since the mortgage debacle of the last decade. Conventional home improvement loans are rather hard to come by. VA Home improvement Loans have some distinct advantages:
- No cash down payment is required.
- No penalties are applied if the loan is paid off early.
- Because of the government guarantee, veterans and service members get the best interest rates.
- Qualification is so much easier than for conventional home improvement loans.
- Energy-efficiency goals for home improvement are sought after by the federal government.
Energy Efficiency High on the List
The federal government has among its policy goals to reduce dependence on foreign energy sources. That being the case, any number of energy-efficient upgrades are okay for financing with a VA Home Improvement Loan. Among them:
- Replacing heating and cooling systems with more energy-efficient systems.
- Improving insulation or caulking.
- Upgrading storm windows and storm doors.
- Installing energy-efficient thermostats.
Some Restrictions Apply
You cannot borrow an amount that is more than 90% of the available equity in the property. You will need to check with your present lender to see how much equity the home now holds. If you must borrow more than $3,000, you will have to show that the improvements will lower the household utility bills. If you borrow less than $3,000, you need only show the lender your receipts. If you borrow more than $6,000, you will have to get the home appraised once again. Energy efficiency need not be the only goal for a VA Home Improvement Loan. Other uses can include:
- New windows, new doors, new siding or a new roof.
- New plumbing or new wiring and attendant fixtures.
- Additions, such as a bedroom or a garage.
- Bathroom, basement or kitchen remodeling.
Other Considerations
VA Home Improvement Loans can be financed for up to 15 years. You may be able to qualify for more than one improvement loan, for instance, one for an addition and one for new plumbing. With VA Home Improvement Loans, credit scores may be a consideration depending on the lender. However, with the guarantee of the federal government, these will not play as large a roll as in conventional loans. Check with a lender experienced with these types of loans.

Basics on Government Home Improvement Loans

No matter if you're trying to fix the faucets in your home or adding on to a room, you might be looking into getting a home improvement loan. The government has programs that will allow you to make improvements on your home, especially in a troubling economy. This article will take a look at a few government programs that might be available for you.
The more common term that you might find when you're looking at government loans is that they will often times call at rehabilitating a home. one of the important factors to understand is that you must comply with all of the government standards in order to qualify for a loan.
Not just for single family homes
One of the nice things about government loan programs is that they're not usually limited to just a single-family dwelling. So if you own duplexes or a small apartment complex you often can still get a government loan to do rehabilitation.
Condominiums can be different
If you're dealing with condominiums, you usually have to be the owner of the condominium in order to qualify for the loan to do an improvement. These improvements or rehabilitation projects are usually only for interior improvements.

How to Use a VA Home Improvement Loan

Veterans can use a VA Home Improvement Loan to improve an existing home. Many veterans are unaware of this awesome opportunity. These type of loans are guaranteed by the Federal Government to lenders who offer home upgrade financing. This gives veterans a chance to upgrade their current home.
This is really not a loan but a loan guaranty process. Why is that? Since the VA is really not a lender or a bank, they do not do the loans. But they do guaranty full repayment of the loan. The cool thing about this is it reduces the risk. Thus the lending institution can offer more reasonable rates.
Consider the advantages of a VA home improvement loan:

• A cash down payment is not required
• No pre-payment penalties
• Veterans are sure to get better mortgage rates
• Easier qualification requirement than trying to do this with a conventional loan
• Increase the energy-efficiency of the home

Here is a list of those energy-efficient home upgrades that can be covered by a VA Home Improvement Loan:

• Upgrading your heating and cooling systems to higher energy-efficient systems
• Improving the insulation or updating the caulking
• Improved storm windows and doors
• Energy-efficient thermostats

There are some restrictions though. If you have to borrow more than $3,000, you will have to prove that the improvements will reduce you utility bills. You are permitted to borrow up to $6,000 without an appraisal of your home value. If you only need $3,000 or less, you only have to provide the lender with the receipts of your improvements.
You can also use a VA Home Improvement Loan for other improvements such as new windows, new doors, and a new roof are all things that can be paid for with a VA loan. Other updates you can use this type of loan for is updating plumbing and related fixtures, perhaps you want to add a garage, or other remodeling projects (like bathroom or kitchen remodeling). But you cannot borrow more than 90% of the home's available equity. So you need to be aware of how much equity you have available in your home.
One advantage with this type of the VA loans is you can finance the upgrades for up to 15 years. You also can qualify for more than one home improvement loan. That makes it worth investigating!
Remember, every loan requires good credit. Make sure your credit is in good shape before you try to qualify for this home improvement loan. You will also need to find a lender who specializes in VA loans.
The good news is all of these type of repairs increases the equity in your home. That is like putting money in your pocket! Think about it, the Veterans Administration wants you to have a nice updated home. Do not put off the necessary repairs or upgrades! You can make those essential changes. So if you are a qualified veteran, be sure to take advantage of a VA Home Improvement Loan for your home changes.