What Can a VA Loan Be Used For?

What Is a VA Loan?

The VA home loan program was created in 1944 when the Servicemen's Readjustment Act, also known as G.I. Bill, added a package of benefits to eligible service members. It is administered by the US Department of Veterans Affairs (VA). The VA does not actually lend money; it reimburses VA mortgage lenders if borrowers default on VA home loans. Because this guaranty reduces the risk to lenders, VA home loans are widely available at reasonable cost.

What Are the Uses for VA Loans?

Va home loans can be used to build, buy, improve or refinance your primary residence -- vacation homes and rental properties are not allowed. VA loans can finance almost any type of property, including manufactured homes and condominiums. However, VA loans for condos can only be used for VA-approved projects. VA loan home improvement financing is also available, including energy-related improvements.

Here are some of the most common uses of VA home financing:

  • Build a single family home
  • Buy a multi-family home consisting of two-to-four units (you must live in one unit)
  • Buy a single family home, a condominium unit in a VA-approved development, or a co-op unit
  • Repair, renovate or upgrade a primary residence
  • Refinance a mortgage
  • Buy a manufactured home and / or lot
  • Make energy-efficient improvements like solar heating or cooling systems

Refinancing with a VA Loan

You may use the VA Interest Rate Reduction Refinance Loan (IRRRL) to refinance your current mortgage if it's a VA mortgage (this is also referred to as a VA Streamline). You may also refinance a non-VA mortgage with a VA home loan. There are rules about VA refinances; you have to achieve certain benefits like a lower payment or the conversion of an adjustable loan to a fixed-rate mortgage. Cash-out refinancing is also allowed.

Additional Information

VA home loans are especially suitable for eligible veterans (and their families, when applicable) who need to finance more than 80 percent of a home's appraised value or purchase price, because mortgage insurance is not required. The resource pages listed below cover the advantages and drawbacks you should be aware of before choosing a VA mortgage, and what you need to know before applying for one.

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