VA Home Improvement Loan – Guide to Best Use

This Old HouseThe Veterans Administration (VA) offers veterans and active duty service members some awesome opportunities to make their homes more comfortable, more valuable and more energy-efficient. VA Home Improvement Loans are guaranteed by the federal government and are available through lenders who offer home upgrade financing.Not Really a Government LoanGetting a VA Home Improvement Loan is not really getting a loan from the the Veterans Administration. Neither the VA nor the federal government is a bank. They do guarantee full repayment of the loan, though. This takes the risk factor out of the loan for the lender and they are usually willing to offer very reasonable interest rates on such loans.Advantages of a VA Home Improvement LoanTraditional lending institutions such as banks and credit unions have raised their lending benchmarks considerably since the mortgage debacle of the last decade. Conventional home improvement loans are rather hard to come by. VA Home improvement Loans have some distinct advantages:– No cash down payment is required.– No penalties are applied if the loan is paid off early.– Because of the government guarantee, veterans and service members get the best interest rates.– Qualification is so much easier than for conventional home improvement loans.– Energy-efficiency goals for home improvement are sought after by the federal government.Energy Efficiency High on the ListThe federal government has among its policy goals to reduce dependence on foreign energy sources. That being the case, any number of energy-efficient upgrades are okay for financing with a VA Home Improvement Loan. Among them:– Replacing heating and cooling systems with more energy-efficient systems.– Improving insulation or caulking.– Upgrading storm windows and storm doors.– Installing energy-efficient thermostats.Some Restrictions ApplyYou cannot borrow an amount that is more than 90% of the available equity in the property. You will need to check with your present lender to see how much equity the home now holds. If you must borrow more than $3,000, you will have to show that the improvements will lower the household utility bills. If you borrow less than $3,000, you need only show the lender your receipts. If you borrow more than $6,000, you will have to get the home appraised once again. Energy efficiency need not be the only goal for a VA Home Improvement Loan. Other uses can include:– New windows, new doors, new siding or a new roof.– New plumbing or new wiring and attendant fixtures.– Additions, such as a bedroom or a garage.– Bathroom, basement or kitchen remodeling.Other ConsiderationsVA Home Improvement Loans can be financed for up to 15 years. You may be able to qualify for more than one improvement loan, for instance, one for an addition and one for new plumbing. With VA Home Improvement Loans, credit scores may be a consideration depending on the lender. However, with the guarantee of the federal government, these will not play as large a roll as in conventional loans. Check with a lender experienced with these types of loans.Money In Your PocketMaking improvements on your home is the next best thing to putting money in your pocket. It would behoove any veteran or service member who owns a home to take advantage of a VA Home Improvement Loan, not only for immediate comfort, but also for value on down the line.