Financing Your Dreams: Home Improvement Loans for Veterans

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Contributor, Benzinga
October 10, 2023

Getting a home improvement loan for veterans in the United States can be simpler than you think. The U.S. Department of Veterans Affairs has a wide range of funding resources and tools available to eligible veterans. A VA home improvement loan can offer you the opportunity to purchase a fixer-upper and renovate it. Explore home improvement loan opportunities while comparing reputable lenders. Starting the search brings you one step closer to becoming a homebuyer and financing your dreams.

What Is a VA Home Improvement Loan?

A VA home improvement loan is provided by private lenders and partially guaranteed by the U.S. Department of Veterans Affairs. The guarantee helps to safeguard private lenders against potential default. The loan is considered part of a VA mortgage. A VA rehab loan can be used to purchase and renovate a new home or improve a current home. 

VA Home Improvement Loan Guidelines

VA home loans can be provided to eligible veterans and active duty personnel and their spouses. Loans usually require no down payment or mortgage insurance, with lower interest rates and closing costs. You may need to pay a funding fee to receive a loan.

Reach out to a knowledgeable lender to receive more information. Top lenders have tools and resources such as online mortgage calculators.

Loan Options for VA Home Improvement

Qualifying veterans can use a VA home improvement loan for more than just repairs — purchase loans, cash-out finance loans, adapted housing grants or supplemental VA loans are available.

Purchase Loans

A purchase loan functions similarly to a conventional VA home loan. The loans help borrowers to get into homes that require some improvements prior to being inhabitable. It’s possible to combine the purchase price and renovations into a single loan.

Cash-out Refinance Loans

Cash-out refinance loans help individuals that need to access the equity within their houses. The equity can fund necessary repairs and home improvement projects. The loan type functions similarly to a debt consolidation loan.

Adapted Housing Grants

Adapted housing grants — or specially adapted housing (SAH) grants — fund the adaptation of a home to accommodate eligible veterans and service members. The grant focuses on helping individuals with service-specific disabilities by building or modifying a home to meet certain needs. For example, the grant can be used to create a wheelchair-accessible home.

Supplemental VA Loans

Supplemental VA loans provide borrowers with flexibility because they can be added to an existing mortgage loan or designed as a second mortgage. The loans focus on ensuring a home is livable.

Native American Direct Loan Program (NADL)

Native American veterans and veterans with Native American spouses can access the Native American direct loan program (NADL). The program assists with buying, building and improving homes on federal trust land and can be used for new loans or to refinance. 

Interest Rate Reduction Refinance Loans (IRRRL)

Interest rate reduction refinance loans (IRRRLs) help veterans lower mortgage payments. The refinance loan permits eligible individuals to replace a current mortgage with a new one to receive more favorable terms and rates. Using an IRRRL can improve stability by switching from an adjustable interest rate to a fixed interest rate.

Energy Efficiency Loans

Energy efficiency loans — VA energy efficient mortgages (EEMs) — are designed to fund eligible home improvements such as weatherproofing, implementing new insulation, improving furnace efficiency and using solar panels. The loans can be used in combination with other resources such as a streamlined refinance.

Eligibility Requirements

VA loan eligibility requirements depend on when an individual served in the military. Veterans can receive relevant information on the U.S. Department of Veterans Affairs website. Service members are required to have served a minimum of 90 days, subject to additional regulations.

Veterans need to meet requirements implemented by individual lenders. A VA Home Improvement loan requires a Certificate of Eligibility (COE), which indicates that an individual’s VA benefits are acceptable for a VA loan.

Application Process

VA home improvement loans are provided by a variety of lenders. You’ll need a COE to qualify. Lenders will require information ranging from your credit score to your employment history. Ask a lender about the required documents prior to applying to expedite the application process.

Other Loan Alternatives for VA Home Improvement

Alternatives to VA home improvement loans allow you to explore a wider selection of funding opportunities. Compare the possible benefits and drawbacks related to conventional home renovation loans, home equity loans and FHA 203(k) loans to understand what option would work best for you.

Home Equity Loan or Home Equity Line of Credit 

Home equity loans use fixed interest rates and fixed payments. In contrast, home equity lines of credit (HELOCs) use revolving credit lines and variable interest rates. HELOCs are often used for credit card consolidation on high-interest debt.

Home equity loans and HELOCs use your home as collateral. Using your home as collateral puts your housing in a precarious position if you are unable to keep up with payments. It’s possible to lose the property you provided as collateral after too many missed payments.

FHA 203(k) Loan

An FHA 203(k) loan is a type of rehab loan that’s insured by the Federal Housing Administration (FHA). It allows veterans to purchase and repair single-family homes. 

Conventional Home Renovation Loan

Conventional home loans are not provided by government programs and typically have stricter requirements. Bad credit can make it difficult to obtain favorable rates and terms. Consider paying bills in full to improve your credit score before applying for a conventional loan.

Financing Your Home: An Achievable Dream

Veterans can finance and improve the home of their dreams using either a VA home improvement loan or a top alternative such as an FHA 203(k) loan or a conventional loan. Your choice of a home loan provider depends on personal preference, goals and eligibility requirements. Compare available loan opportunities and mortgage rates to discover how close you are to achieving the dream of homeownership.

Frequently Asked Questions


What credit score is needed for a VA home improvement loan?


The VA does not have a minimum credit score for home improvement loans.


Can you get a mortgage to cover renovation costs?


Yes, a VA renovation loan can assist with the purchase price and home repair costs.


Can a VA renovation be done as a refinance?


It is possible to use a VA renovation loan to refinance. 

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