Tips & Special Topics
Acceptable Uses for VA Loans
Added May 28, 2010
Many eligible VA loan borrowers understand that veterans’ mortgages can be used to buy homes. In fact, there are many acceptable uses for VA home loans. Under the VA guidelines, a VA-guaranteed loan may be used to:
• Purchase a home
• Purchase a VA-approved townhouse
• Purchase a VA-approved condominium
• Buy a custom home
• Make home improvements, repairs or alterations with a refinance
• Get cash out of equity to make “green” upgrades
• Refinance an existing loan (VA or otherwise)
• Reduce interest rate and/or monthly payments of an existing VA loan
A common stipulation with the use of the VA home loan benefit is OWNER OCCUPANCY. VA loans require the borrower to certify that he or she will occupy the home within a reasonable time. The VA mortgage program is intended to help veterans purchase homes to live in rather than to rent out.
That said, a VA borrower can buy a multi-unit property and occupy one of the units while leasing the others out. A VA loan may be used to purchase a multi-unit property with as many as four units.
If two or more VA-eligible borrowers partner together to purchase a multi-unit property, up to four units plus an additional unit per borrower is allowed. For instance, two VA-eligible borrowers could own a sixplex together. Three VA-eligible borrowers could own a seven-unit property together, and so on. Not all lenders offer this type of loan. Though financing a multi-unit home with a VA loan is allowed, the majority of VA borrowers are single family homeowners.
Many eligible VA borrowers are unaware that their VA loan benefits can be used for so many different purposes. Every borrower’s situation is different. Military borrowers often have unique needs due to their assignments, and the VA Home Loan Guaranty program has grown over the years to assist veterans with their home financing needs.
It’s important to know that lenders may have additional guidelines for VA home loans, and not all lenders offer all types of VA loan financing. For more information about the acceptable uses of VA loans, contact a VA mortgage professional.
