Your home is a very important part of your life and as your home ages, repairs and upgrades become inevitable. The VA renovation home loan provides a convenient way for borrowers to make renovations, repairs or improvements which total up to 25% of the “as-completed” appraised value of the property with a first mortgage, rather than a second mortgage, HELOC or other more costly financing methods.

This means that if you have a property purchased for 300,000.00 however appraised subject to completion of the repairs at $400,000.00, you’re able to use $100,000.00 towards renovation. After Completed Appraised Value of $400,000 x .25 = 100,000.00.

Not only that but you’re able to take advantage of the benefits of a VA mortgage at the same time. I’ve found many cases where a VA borrower has found the home of their dreams but wanted to change a few things upon purchasing the property. If this is the case with your situation you will want to read or print this to ensure you follow proper protocol.

Program Details:

  • FICO Requirements: Purchase: 640, Refinance: 660, High Balance Refi: 700
  • Loan-To-Value: 100%
  • Max Loan Amount: VA Loan Limits: Visit this link for limits @
  • One Unit Properties Only (NO Manufactured Homes at this time)
  • Renovation must be complete in 90 days
  • Number of Contractors Allowed: 3, General Contractor preferred but not required
  • Number of Sub-Contractors: Unlimited
  • Contractor must be registered and vetted

On most renovation products you also have what is called a Contingency Reserve, a contingency reserve is designed to protect you from any unforeseen items that may come up or additional items are wanted. This is to protect you as the borrower to not run out of money when renovating loans. A contingency reserve equal to 10% (or may be higher depending on

A contingency reserve equal to 10% (or may be higher depending on scope of work) of the total costs of the repairs and renovation work must be established and funded for all mortgages to cover required unforeseen repairs or deficiencies that are discovered during the renovation. We do require a 20% contingency reserve when the property needs structural repairs, or where utilities are turned off.

Allowable Repairs:

  • Repairs and final inspection completed lesser of 90 days or as approved by the Renovation department
  • Maximum repairs 25% of the after complete value.
  • Roof: repair or replacement (covering, underlayment
  • Gutters/downspouts: install, repair, replace
  • Insulation: ceilings, walls, asbestos removal
  • Siding, windows, doors
  • Paint: interior, exterior, lead paint abatement
  • Kitchen: all appliances, cabinets, total
  • Electrical: repair, replace, recondition all
  • Plumbing: repair, replace, recondition all
  • Repair, Replace HVAC or other systems
  • Repairing or removing an in-ground swimming pool
  • Installing or repairing fences, walkways and driveways
  • Flooring, subflooring, tile, carpet, wood
  • Termite treatment, damage repair
  • Repairing or replacement of well and septic
  • Weatherization items, repairs, improvements
  • Foundation Repair

Non-Allowable Repairs:

  • Repairs performed by the borrower
  • No Detached Garages
  • No Swimming Pool Installations. Pool Repairs are allowed.
  • Improvements that do not conform to the surrounding neighborhood
  • Any new construction including room additions.
  • Landscaping or similar site amenity improvements.
  • Rehabilitation activities that require more than two payments per specialized contractor.
  • Major rehabilitation or major remodeling.
  • Require plans or architectural exhibits.
  • Results in work not starting within 30 days after loan closing.
  • Borrower is unable to occupy at closing or within 30 days.
  • Television antenna and satellite dishes.
  • Additions or alterations for commercial use.
  • SFR conversion to a 2 unit
  • Any structural repairs or renovations that are not foundation or roof repair.

There’s much more than the above information to know when entering into this type of transaction and I’ll list the steps you want to take, in order.

Step 1: Get pre-approved for the loan size you will be seeking (after improved value, up to 100%) through an approved and knowledgeable VA Renovation Lender. APPLY ONLINEStep 2: Find the property and make an offer

Step 2: Find the property and make an offerStep 3: Find a contractor local

Step 3: Find a contractor local in the area that you can trust. If you get a contractor from either Lowe’s or HomeDepot we do not require contractor approval and can make the draws any way they would like.Step 4: Get the contractor approved and run the background check.

Step 4: Get the contractor approved and run the background check.Step 5: Accepted offer obtained,

Step 5: Accepted offer obtained, new loan is closed.

Step 6: Work begins on the property and must be complete within 90 days minimum (please ensure work is able to be complete in that timeframe.

Step 7: Draws are given throughout the process with a maximum of 2 per contractor, 30% initial, 70% final.

Step 8: Work is complete, we send out the appraiser to ensure what was going to be done is finished and the final draw is given to the contractor. Any remaining funds that were unused would be given as a principal reduction on the mortgage.

If you have any questions about this process, found a property that needs some work or want to do it on your existing property. Please give us a call at: 800-779-4547 or apply online here:

Erik Sandstrom
LoanSafe's Mortgage Expert
I'm a Senior Loan Officer and LoanSafe mortgage expert. If you need a live rate quote, or need help getting a new mortgage, please call me direct anytime at 619-379-8999.