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Can You Get Extra Money on a VA Home Loan?

A common question among VA borrowers is, "Can you get extra money on a VA home loan?” Borrowers typically want to know if they can borrow money beyond a home's appraised value for repairs and other home-related costs.

The general answer is no. VA loans are calculated for a specific amount that includes the sale price or appraised value of the home (whichever number is lower) plus any allowed add-ons to the loan, such as the VA funding fee, should it be financed.

VA lenders will not approve buyers an amount beyond the sale price or appraised value of the home. However, the VA offers several options for VA buyers considering a home they want to update.

Can You Add Renovation Costs to a VA Mortgage?

For buyers wanting to purchase a "fixer-upper" or home that requires a lot of work, they should look into a VA renovation loan, which rolls the costs of the home and home renovations into the same mortgage.

The VA renovation loan permits borrowers to finance renovations that directly increase property value, including:

  • Energy-efficient upgrades like HVAC systems, solar panels, smart thermostats, storm windows and doors, caulking, heat pumps, and new insulation
  • Structural modifications
  • Safety and accessibility improvements.

Cosmetic upgrades and luxury items like swimming pools and home theaters are excluded. This flexible financing option allows Veterans and service members to make meaningful home improvements while adhering to VA guidelines.

One factor to consider when taking advantage of a VA renovation loan is the strict timeline for completing the renovations. All work must be finished within 120 days of closing on the loan. This deadline ensures prompt upgrades, minimizing the risks associated with prolonged construction projects.

VA Energy Efficient Mortgage (EEM)

For energy-efficient improvements in particular, buyers will want to look into an Energy Efficient Mortgage or EEM, which is a type of VA loan that allows borrowers to finance energy-efficient upgrades such as solar panels, insulation, efficient heating, and cooling systems up to an additional $6000 in their VA loan. If the home a buyer wants to purchase only needs minor work, other options include requesting a price reduction or seller concessions to help compensate for certain repair costs.

The Bottom Line

Although you can only borrow up to your home's appraised value with a VA loan, the VA offers a variety of options to assist Veteran homebuyers in their quest for property improvement. Through programs like the VA renovation loan, eligible borrowers can make the most of these unique financing opportunities to turn a fixer-upper into their dream home.