I've heard of this elusive VA Rehab loan that allows a buyer to purchase a house and get cash to do rehab work. I'm looking at a short sale that's $335,000 and it's after repair value would be pushing $400,000. Does anyone know if such a program exists or has anyone used one in the past? Does anyone know of any lenders that are currently (Spring 2015) offering such a loan?
I could be mistaken, but the VA has a Construction Loan, not a Rehab loan. You may be thinking of the FHA rehab loan, where you can wrap renovation costs of up to 110% of the purchase price into the loan. There are drawbacks however, and it certainly isn't cash as multiple draws, estimates, and appraisals are required throughout every step of the process. Usually the interest rate is higher, and the 203k loan also requires PMI until the end of time. Additionally, both the FHA and VA loan are for primary residence purchases only, so no flip/investment purchases.
You would want to look into the 203k. VA does not allow for renovations/rehabs.
Thanks! Is the PMI on the 203k removable once 20% equity is achieved? This would be for our personal residence, we plan to keep our current house as a rental. It currently has a VA on it, however, so we would need to refi especially since we plan to transfer it into an LLC... but that's another barrel of worms!
Thanks for this thread, I'm trying to help my sister and brother in law with a VA loan / property, and am trying to find info on a lender that offers VA rehab loans. At the VA website, it clearly states that:
VA home loans can be used to
- Build a home
- Simultaneously purchase and improve a home
That being said, we're on the hunt for lenders that offer VA Rehab loans, i.e. the second on that list. If anyone knows of any lenders that offer this, we are interested. If we find anything, I'll post what I find here.
So, to follow up on this thread - I found someone else in the forums that found a lender for a full construction VA loan using iMortgage and FGMC (I guess to do some kind of bridge loan) - used in combination.
The problem we're having is that the guys at iMortgage are just not very responsive. We're trying to get a basic quote, and it's like pulling teeth. Maybe you'll have more luck with the guys in your area, if there are any ... they also only offer the streamlined version (up to $35K), and currently don't have anyone certified (?) to do anything bigger ...
I'm amazed at how little lenders know about VA construction loans, many of the lenders we talked to just flat out said they don't exist, and obviously they're wrong. I think you just have to follow any leads you can and bang on a lot of doors.
In the meantime, though, here's another possible strategy:
Do a conventional Homestyle rehab loan (you would qualify for less, but it wouldn't be THAT much less), and once it's all fixed up, re-fi into the VA loan. You might even pull out some extra cash on increased equity while you're at it.
Thank you for that response!!
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imortgage does have VA Renovation loans. If you need someone to contact you regarding this, please let me know. I can get in touch with the branch manager in your region and make sure you are contacted quickly.
I'm sorry you had a poor experience in the Seattle area, I can also make sure you get contacted right away.
To follow up on this thread with a little more info I've found since my last post:
Found someone in our area that will do new construction VA loans - they were with this company:
Maybe they have loans in other areas, might be worth a call. The only VA construction loans they do are full / new construction or the energy efficient renovation loans (which I think are more common, but are limited to only energy efficiency improvements). The company I mentioned before (iMortgage) does $35K max VA renovation loans that can be used for any kind of renovation, similar to the FHA 203K Streamlined loan.
This means the only base I haven't covered is a renovation loan that allows for more than $35K (not new construction), similar to the Full FHA 203K loan and the conventional Fannie Mae Homestyle renovation loan.
It took looking around a lot to find just the two I've found so far, so it's hard, but not impossible to find lenders. For all that work, it seems even less likely to be able to compare bids from different lenders ... if you can find two lenders that you can get competing bids from (on the same loan product), then you've hit the jackpot as far as I'm concerned.
By the way - for anyone looking to do this, you might consider just doing a conventional Homestyle renovation loan (or FHA 203K, but I prefer the conventional over FHA), and once it's done, re-fi into a standard VA loan. You would put up a down payment and the rate wouldn't be as good, but it would only be for a few months until the project was completed, then you could re-fi with the VA 100% LTV benefit with a better rate, and you probably would be getting more cash back then you put in, assuming the property value appreciated more than the costs of the renovation.
This would also mean you could get more bids to actually compare with and pick the best one. In this case, rates don't matter as much as lower closing costs, since it would be short-term. You would pay a second round of closing costs, but only for re-fi, not with the additional seller / buyer closing costs that would be unnecessary (escrow, title, etc.).
So anyone searching for VA renovation loans can always use this model as "Plan B" if you can't find a good VA loan.
Thats not necessarily true. I used to work for the VA and I know for a fact that the VA loan will allow for additions, if nothing else, for handicap access and disability related navigations of the property, to include stairwell modifications, handrail additions, etc.
This is usually only for unique cases of disability though, IE severe injuries and/or disabilities.
Has anyone looked into USAA for VA loans? They are pushing them on their website.
I bank with them, but do not work for them in any way.
VA construction loans, the VA does guarantee loans to buy and renovate existing property. The veteran completes the VA loan application and provides a contractor for VA approval. The plans and specifications for the improvements must be itemized along with an estimate for how long the construction period will last.
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For a project over $35K, you can look at the FHA 203(k) which does not have a renovation budget limit, but up to 110% of the value, or the HomeStyle Renovation loan for investors/Primary Residences which is a max budget of 50% of the After Repairs Value.
I'm working on doing one now. You just need to find a lender that does them. I'm going through University Lending but I'm in the panhandle.
Hello, We are looking to buy a home in Florida that needs a lot of work. The home was left unfinished, but has exterior, roof, windows. Interior is just framing, some plumbing, no electrical. The purchase price is $200K. And the estimated cost of compleating is ruffly $150K. The home is just under 5000 sq ft, and on 10 acres with a barn/ garage that has a finished area with a bed and full bath. The appraised value of the home when work is compleated would easily be above $650K.
My husband is retired military and has his VA benefits. But we have been told that this wont fit the VA requirements. We will have cash upward of $200K, but that won't be available for 6 months. So we would need a min. Down payment.
At this point we don't really care what program we use, we just want to close on it as quickly as possible. We keep Getting told by lenders we have talked to that this is an amazing investment and awsome potential, it just doesn't fit any available programs.
Anyone have any ideas?
I used iMortgage for my VA Rehab loan on my personal residence and had no issues with them. Since this is an unconventional lending instrument, you have to make sure all your ducks are in a row (contractors willing to perform the work, dates of work start/completion, all additional paperwork completed, etc), but it was well worth it.
Prior to this, I was looking into purchasing a piece of land and building a home using a New Construction VA loan. Finding a lender willing to do this was quite difficult, but ended up finding FGMC http://fgmc.com . They will do this type of loan. The only reason I didn't move foreword is because I was trying to build a multi family to house hack - they will only finance SFRs.
Hope this helps, feel free to contact me regarding details.
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Very few lenders do offer VA or FHA Construction-to-Permanent Financing. I echo Ryan Murphy's advice and would recommend AnnieMac Home Loans.
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Not sure if this post is still current but there is a VA mortgage that allows for renovations as well. The VA program allows for renovations of up to $35,000 and the repairs are limited to minor cosmetic type repairs.
Has anyone ever used a VA rehab loan for a duplex/fourplex?
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