A Veterans Affairs, or VA, loan can help you and your family build a new home or improve an existing home with no down payment. Do you or your spouse qualify for a VA loan? Is your planned renovation eligible for a VA rehabilitation loan? Are there VA loans available to make repairs that improve your home’s energy efficiency? Read on to learn the basics of VA loans.
What is a VA Loan?
VA loans are intended to help servicemen and women receiving financing in areas where it is not readily available. VA loans can also allow servicemen and women to purchase property with no down payment. These loans are provided by private lenders, but are guaranteed by the US Department of Veterans Affairs.
Who is Eligible for a VA Loan?
Veterans, active duty military, guard or reserve servicemen and women, and military spouses are potentially eligible for a VA loan. The first step in applying for your loan is completing VA Form 26-1880 with the Veterans Association.
Eligibility depends on dates of service, length of service, and discharge circumstances. You must also provide proof of sufficient income and credit. VA loans are only issued for homes that you or your spouse intend to personally occupy.
What can I do with a VA Loan?
A VA loan can help you purchase a home, refinance a home, build a new home, or, in some cases, purchase land for construction of a new home. If you do not own the lot you are planning to build on, that may be included in the amount of the loan. For new construction, you will need to provide building plans and general specifications provided by a licensed contractor.
If you intend to use your VA loan to refinance or restore a home, you will need to provide an itemized list of proposed renovations. These renovations may include roof repairs, new HVAC systems, and kitchen and bathroom remodeling. The estimated costs must also be certified by a contractor before a loan will be issued.
What is a VA Energy Efficient Mortgage?
An Energy Efficient Mortgage, or EEM, is an increase of your VA by $3,000 to make changes to an existing home to improve energy efficiency. These loans require documentation of the potential cost of home improvements so you’ll want to get quotes, bids, or contracts from companies like Comfort King Ltd. The covered improvements include:
- Thermal windows and doors
- Improved insulation
- Solar heating and cooling
- Furnace modifications (but not a replacement furnace)
A VA EEM can be increased to $6,000 if you can prove that the savings offset the extra mortgage cost. Talk to your lender for more information about which home energy modifications are covered and which are excluded under a VA EEM.
Talk to local lenders about the availability of a VA loan that fits your needs. Because VA loans are provided by private lenders instead of the Department of Veterans Affairs, interest rates will vary. Shop around to get your best deal.