VA Renovation Loans: Where to Find the Unicorn?

Question

Hey everyone,

I'm considering doing a live-in rehab to start the process of BRRRR. I am eligible for a VA loan and came across some descriptions of the VA Renovation Loan, but with no leads as to where to attain this type of financing. It is ideal for what I am looking to do in my current position and my market. All the VA lenders I have called do not offer it and it seems like a dead end and this type of loan seems to be a bit of a unicorn. This is an obstacle I'd really like to find a way over or around. Any information that could help me find a lender that offers this specific type of loan would be greatly appreciated.

Thanks!

David Hooper · Answer

Hey @Jimmy Smith,

The best renovation/rehab loan product on the "conventional" / "government" market right now is FNMA's HomeStyle program, which will let you borrow up to 97% (ARV or total cost) up to the conforming limit ($484,350 in most places for 2019). You have to get your bids and budget in place, order a specs and plans appraisal, then you close on the loan to purchase. You get an "escrow" account from which you draw on your construction/rehab costs.

In terms of the VA's rehab/renovation loan... it's an idea the VA has been working on, but despite the mortgage industry's work with them to get the program up and running, it's still a bit of a mess. It would look a lot like the FHA 203K, since that's what it's modeled on, and my company and our investors are "in the trenches" of trying to get this product to market effectively.

A good option for you might be to proceed with a relatively "normal" rehab/renovation loan at the 97% LTV and once you've been on title for 6 months, look at refinancing with a VA loan (100% cash out refi possible). Of course, you suffer on the interest rate on a cash out refi vs. a purchase loan.

I've attached a pic with some details on the HomeStyle loan. Hit me up if you have additional questions.

Ainjel McDonald · Answer

Hi Jimmy,

Motto Mortgage provides a VA Rehab loan. I cannot speak of the quality/value of their services or mortgages though, as I haven't used their services (yet).

Best,

Ainjel

Jimmy Smith · Answer

Thanks @David Hooper, thats very helpful! I'll send you a pm.