What You Can (and Can’t) Do With a VA Loan (2024)

FAQs

What You Can (and Can’t) Do With a VA Loan? ›

You can't purchase or build a vacation home or a purely investment property with a VA loan. New construction is possible, but veterans can't simply purchase a plot of land with the intent to build a home some day. You also can't use this as a business loan. Again, the focus is on primary residences.

If you qualify for a VA-backed purchase loan, you can use the loan to: Buy a single-family home, up to 4 units. Buy a condo in a VA-approved project. Buy a home and improve it.

To get a VA loan the law requires that: You must be an eligible veteran who has available home loan entitlement (except in the case of an interest rate reduction refinancing loan--see "Interest Rates" below. You must have a good credit record.

If you want to sell your house with a VA loan, there is no required amount of time that you have to wait. You are welcome to sell your house whenever you want, but it is generally a good idea to make sure you can make enough money from the sale to pay off the remaining balance of your mortgage.

Additionally, closing times on VA loans are slightly longer. The appraisal process will also be a little different, as the VA requires the appraiser to check off on Minimum Property Requirements (MPRs) to ensure the property is sanity, structurally sound, and safe (the three S's).

VA loans offer many benefits such as no down payment or mortgage insurance, easier qualifications and lower interest rates. However, they also have drawbacks such as a required funding fee, property restrictions and potentially less equity to start.

You can't purchase or build a vacation home or a purely investment property with a VA loan. New construction is possible, but veterans can't simply purchase a plot of land with the intent to build a home some day. You also can't use this as a business loan. Again, the focus is on primary residences.

Since 2020, eligible borrowers who have full entitlement are not subject to loan limits. For borrowers with partial entitlement, VA loan limits vary based on the county you're buying a home in. As of 2024, the standard VA loan limit in most parts of the country is $766,550.

VA loans allow 100% financing, never require mortgage insurance, and carry flexible underwriting guidelines which makes it easier for you to get to your closing on-time. If you're shopping for a loan and considering the VA loan option, here are the answers to 10 popular VA loan questions.

There is no limit to how early you can pay off your VA loan.

What is the lowest credit score for a VA loan? ›

The VA doesn't have a minimum credit score requirement. Instead, lenders can set their own requirements. At Rocket Mortgage, the minimum qualifying credit score is 580. Keep in mind, you can qualify for more favorable terms with a higher score.

Normally, if you have paid off your prior VA loan and disposed of the property, you can have your used eligibility restored for additional use. Also, on a one-time only basis, you may have your eligibility restored if your prior VA loan has been paid in full but you still own the property.

A seller has the right to refuse a VA loan, but it is important to know that discriminating against Veterans is against the law. Some sellers may be cautious of accepting VA offers due to misconceptions or past experiences with this type of loan.

Red flags include the presence of radon gas, asbestos or lead-based paint within the home, or properties located in a flood zone, near a sinkhole, or proximity to any type of environmental contamination.

It is the homebuyer's responsibility to pay for VA loan closing costs, but it is possible to get sellers to cover a portion of these expenses through negotiation. The VA limits what borrowers can pay in closing costs, and there are actually some costs Veterans aren't allowed to pay.

One of the primary reasons some sellers may hesitate to accept a VA loan is due to misconceptions about the program. Some sellers believe that VA loans involve more red tape, delays, or stricter inspection requirements compared to conventional loans. In reality, VA loans are not as cumbersome as they may seem.

VA Benefits

Elderly Veterans may be eligible for a wide-variety of benefits available to all U.S. military Veterans. VA benefits include disability compensation, pension, education and training, health care, home loans, insurance, Veteran Readiness and Employment, and burial.

A VA-backed cash-out refinance loan may help you to:

Take cash out of your home equity to pay off debt, pay for school, make home improvements, or take care of other needs, or. Refinance a non-VA loan into a VA-backed loan.

VA loan borrowers must use their VA-backed home as their primary residence and occupy the property within a reasonable time after finalizing their loan. VA loans are not intended to be used to purchase vacation homes or investment properties.

Even if you do not have a job, you are not excluded from accessing a VA home loan. While you can't use unemployment assistance to qualify for a VA mortgage, you should be able to build or buy your dream home if you have other qualified income to demonstrate to the lender.