If you’re a veteran, active-duty service member, or surviving spouse, a VA loan can put homeownership within reach. Many of the people who are eligible for this outstanding benefit don’t fully understand how it works. On this page, we answer important questions like Can you use a VA Home Loan more than once? What is a VA Remodel Loan? Can closing costs be included in a VA Loan? And more.
What Is a VA Home Loan?
A VA Home Loan is a mortgage that the US Department of Veterans Affairs guarantees. VA Loans are designed to help veterans, active-duty service members, and eligible surviving spouses buy a home with better terms than conventional mortgages.
The key features of VA Loans are:
- No down payment is required.
- No private mortgage insurance is needed, even with no down payment.
- Interest rates are competitive, typically lower than conventional loans.
- Credit requirements may be more lenient than conventional mortgages.
- There are limits on closing costs, with restrictions on what lenders can charge.
- There are no repayment penalties if you want to pay your mortgage off early.
The VA doesn’t provide the loans themselves: they guarantee a portion of them, which allows private lenders to offer these very favorable terms at less risk to them. You still deal directly with the lender when applying for the mortgage and making payments.
What Kind of Home Can You Buy With a VA Home Loan?
With a VA Home Loan, you can purchase:
- Single-family homes.
- Multi-unit properties of up to 4 units, as long as you live in one of them.
- Manufactured homes or lots.
- Certain approved condominiums.
- Homes that need restoration (with a VA Remodel Loan).
Homes must meet local building codes, be move-in ready, have adequate heating and cooling, a safe water supply and sewage system, safe access, and be free from wood-destroying insects and fungus.
Who Qualifies for a VA Home Loan?
To be eligible, you must be an eligible veteran, active-duty service member, or surviving spouse, and you must obtain a Certificate of Eligibility. Here are the service requirements:
- Veterans who served:
- Wartime: a total of 90 days of active service.
- Peacetime: 181 continuous days of active duty.
- Recent Service (post 1990): at least 24 continuous months or the full period for which they were called to active duty (minimum 90 days).
- Active-duty service members:
- A minimum of 90 continuous days of active service.
- National Guard and Reserves:
- 6 creditable years in the Selected Reserve or National Guard
- OR 90 days of active-duty service, including at least 30 consecutive days under specific Title 32 orders.
- Unremarried surviving spouses of veterans who:
- Died in the line of duty or from a service-connected disability.
- Is missing in action or a prisoner of war.
- Was totally disabled for a specific period before death, even if the disability didn’t cause the death.
To apply for a Certificate of Eligibility, you can apply online through the VA’s eBenefits portal, or your lender may be able to help you obtain it.
Can You Use a VA Home Loan More Than Once?
Yes, you can. Some common scenarios are:
You’ve Paid Off Your Previous VA Loan
Once you’ve paid off a loan and sold the property, your entitlement is fully restored. There’s no limit on how many times you can use your VA Loan benefit throughout your lifetime.
While You Still Have an Active VA Home Loan
You can have two VA Loans at the same time without selling your first home. If your first home didn’t use up the full amount of your entitlement, you can use the leftover amount (called a Tier 2 Entitlement) to buy a second home with no down payment. You must be able to afford both payments, and the new house must be your main home.
You Sold Your Home, But the VA Home Loan Wasn’t Paid Off
If you sold your home but didn’t pay off the VA loan (for example, if the buyer assumed your mortgage), you can request a one-time restoration of your entitlement.
What Is a VA Remodel Loan?
If you’re interested in buying a fixer-upper or renovating your current home, you can get a VA Renovation Loan, also called a VA Rehab Loan.
To get started, you find a home that needs renovation and get estimates for the repairs. Then you submit your application for the loan, along with detailed plans for the work and contractor estimates. The loan amount is based on the home’s after-renovation value. The funds go into escrow until the work is completed. At that time, the funds are released to pay the contractors.
Not all lenders offer VA Remodel Loans, so you’ll need to look around to find one that specializes in them.
Another option for using a VA Home Loan for renovations is to do a VA cash-out refinance. This allows you to pull equity out of your home for the remodel. With a cash-out refinance, you take out a new VA Home Loan for more than your current outstanding loan and use the new loan to pay off the old one. You use a balance for your renovations. The only downside to a cash-out refinance is that you are applying for a new VA Home Loan, so you have to go through the application process again and pay closing costs.
How Long Does It Take to Get a VA Loan?
The typical timeline is 30-45 days from application to closing, similar to a conventional mortgage loan. You can speed up the timeline with the following:
- Have your Certificate of Eligibility ready.
- Make sure your credit is strong, and your financials are clean.
- Submit your documentation promptly.
- Work with a VA-experienced lender.
- Make sure the property meets VA requirements.
Certain issues, such as self-employment income, which requires more documentation, property condition issues, and VA appraisal backlogs, may be out of your control and can extend the timeline.
Can Closing Costs Be Included in a VA Loan?
Technically, you can’t roll closing costs into a VA Home Loan, but there are workarounds:
The VA Funding Fee
The VA Funding Fee is a one-time fee that helps keep the VA loan program working. This fee is 2.15% of the loan amount, and you can roll it into your loan.
Seller-Paid Closing Costs and Seller Concessions
Most VA Home Loan applicants use a combination of seller-paid closing costs and seller concessions to roll some of their costs into their loan.
Seller-paid closing costs on a VA home loan work the same way as for conventional loans: the buyer asks the seller to cover them in their offer. These costs include:
- VA appraisal fee
- VA Compliance Inspections
- Title insurance and title search
- Recording fees
- Credit report fee
- Lender origination fee
Seller concessions are in addition to closing costs, and can be up to 4% of the home’s value. Seller concessions include paying for other expenses typically incurred when a deal closes, including the VA Funding Fee, prepaid homeowner’s insurance, and prepaid taxes. Seller concessions can also include paying off the buyer’s other debt and temporary interest rate buy-downs.
Added together, seller concessions and seller-paid closing costs can save a buyer tens of thousands of dollars. To roll them into the VA Home Loan, buyers often increase the price of the home by part or all of this total amount. The only catch is that the appraisal must be at or higher than the new price.
VA Loans
The VA Home Loan is one of the most powerful benefits available to people who have served and to surviving spouses. Summing up, with a VA Home Loan, you can:
- Buy a house with no down payment.
- Use the benefit multiple times throughout your life.
- Finance renovations with specialized VA remodel loans.
- Get seller concessions of up to 4% of the home’s value.
- Close in as little as 30 days.
If you’re applying for a VA Home Loan, work with a lender who specializes in them, and take advantage of this great benefit.
