VA Renovation Loan

Joliet, Illinois
House Hacking
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VA Renovation Loan

Jonathan AlvarezPro Member
Joliet, IL · Member since 2019 · 3 posts · 4 votes

Hey everyone,

I'm looking at purchasing a property that currently has no finished flooring. Based on what i can see, most of the needed renovations appear to be cosmetic, although i haven't had an inspection completed yet, so i understand that could change.

I spoke with my lender about using a standard VA loan, and i was told the property would need to meet the VA's minimum property requirements before closing. In its current condition, particularly with the missing flooring, my lender does not believe it would pass VA inspection. They suggested looking into a VA renovation loan instead.

The issue I'm running into is that, according to my lender, the renovation work would need to be completed by a licensed, bonded, and insured contractor.

This would be my first deal, and my original strategy was essentially a live and flip house hack. I plan to owner occupy the property for at least two years, complete most of the cosmetic renovations myself, and build some sweat equity. I'm comfortable with taking my time with the renovation, so speed isn't a major concern.

I'm trying to determine the most practical way to structure the purchase while still being able to perform some or most of the work myself.

A couple possibilities I've been considering are:

  • Becoming licensed and insured GC myself. Would a VA renovation lender allow me to act as the contractor if i met all of their licensing, insurance, and other qualification requirements? Or do lenders generally prohibit borrowers from acting as their contractors?

  • Taking care of the necessary repairs before closing: Could i negotiate a purchase contract where the seller allows the minimum repairs necessary for VA financing to be completed before closing, while protecting the agreed upon purchase price?

My goal isn't necessarily to avoid paying contractors altogether. I'm mainly trying to avoid paying contractor labor and markup on work that I'm capable of doing myself, while still structuring the purchase in a way that complies with the lender and VA requirements.

Has anyone dealt with a similar situation using a VA loan or VA renovation loan? I'd especially appreciate hearing how you structured the purchase and whether you were able to perform any of the renovation work yourself.

Thanks in advance for any insight.

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  • Ashley RigsbeePro Member
    Customer Success & Onboarding Specialist at BiggerPockets · Charlotte, NC · Member since 2023 · 120 posts · 46 votes
    2w

    Ask your lender whether they offer a VA renovation loan. Specifically to see if possible for them to fold flooring and other repairs into the loan. Get written bids first so the lender can size it

    BiggerPockets
    0Reply
  • Gregory AcsPro Member
    Lender · MD · Member since 2025 · 239 posts · 90 votes
    1w

    That's a good question, Jonathan. VA renovation loans can be tricky because contractor requirements vary by lender, and many won't allow borrowers to act as their own contractors, even if they're licensed.

    I'd compare lenders that offer VA renovation financing before committing to a structure. Seller-completed repairs before closing might also be worth discussing, but you'd want everything properly documented and approved by your lender.

    Have you spoken with any other VA lenders about their renovation requirements?

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  • Slavik Lund
    Lender · Anchorage, AK · Member since 2013 · 30 posts · 7 votes
    1d

    Hey Jon,

    Just a fun fact: I always try to answer your question without reading any of the previous comments to skew my decision so if it's repetitive I apologize.

    If you're going into the VA loan, then what you're doing with the live and flip is incredible. I've done the same thing with about 10 rentals. A couple of them were fourplexes, a couple of them were duplexes, and yes I've scaled and built the entire portfolio just through the low down-payment loans. You're definitely on the right track.

    With that being said, renovation loans generally come with a cost that's really hard to see up front. They are not cheap or free and sometimes there's a third-party general contractor involved and he needs to get paid too. With that being said it doesn't seem like it's that much work. I definitely would not become a licensed GC myself. That sounds like a tremendously creative solution, but also one that requires a lot of work and you'd probably run into problems with the lender seeing you as the general contractor.

    This is something where I would number one ask your lender to come up with solutions, which is their job: problem solving, and potentially come up with a way to even out the risk of getting them done before closing. I understand this deal's probably closed by now but maybe somebody learns from this topic in general.

    Now I don't know the square footage but I do know that this is not a major issue and there's probably a creative solution on the other corner. Such as in my community, concrete floors may seem unfinished but with the right paint they look really, really, really good. Frankly some buildings like exposed concrete as a finish.

    It's situations like that that help. Get creative in underwriting. Much of underwriting comes down to one person in the background, and hearing and understanding the story and narrative can be the difference between approve and deny.

    Hope that helps

    -Slav

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  • Ray WilliamsBusiness Member
    Lender · Denver, CO · Member since 2017 · 164 posts · 73 votes
    17h

    Jonathan, a couple of things that might open up more options than the renovation loan.

    First, VA minimum property requirements are about safety, soundness, and sanitation, not finishes. Missing flooring isn't an automatic fail. What usually gets called out is exposed tack strips, nails, or damaged subfloor that creates a hazard. Ask your lender whether an appraiser has actually flagged it or whether that's their prediction. A clean, sound subfloor sometimes passes.

    Your second idea is the one I'd lean on. It's common for the appraisal to come back "subject to" specific repairs, the seller completes them before closing, and the appraiser does a final inspection. The trick is keeping the scope small. Ask the seller to put down the cheapest acceptable flooring (basic carpet or LVP), and write into the contract that the price stays the same and who pays for the re-inspection. Then you replace it yourself after you move in.

    On being your own contractor: most VA renovation lenders won't allow it even if you're licensed, because they want a contractor who is independent from the borrower, and many also require the contractor to be registered with VA. Getting a GC license for one deal usually isn't worth it.

    If the seller won't cooperate, it's worth pricing a conventional renovation loan too. Some of those allow limited borrower-completed work with lender approval, which VA reno loans generally don't.

    I am a Veteran and also mortgage broker, and the seller-repair route is the one I see close most often. You could also look to the VA reno loan.

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