A Comprehensive Guide to Veteran Affairs Loans – Renovation and Rehab

Nov 11, 2023 By Susan Kelly

When you are going to buy a new home for yourself, you are in for a treat. The real estate prices have increased significantly in the past few years, causing many to look for deals.

In this article, we share a great option if you have been a veteran and honorably discharged. Let’s discuss how you can get a VA loan and if it is any good. Furthermore, we discuss the pros and cons of veteran affairs loans. Without further ado, let's begin.

What is a VA Rehab Loan?

Many different loans come under VA loans, depending on their purpose. If you want a loan for renovation or repairing a home, a VA loan is the best bet.

It is imperative to understand that these veteran affairs loans are only available if you are a veteran. Furthermore, it also requires that the army discharged you honorably. The good thing is that these schemes are also available to a veteran’s spouse who is still alive.

How Does VA Loan Work?

If you are thinking of applying for one of the Rahab and renovation VA loans, you need to understand a few things. VA will hand you out the loan as a single complete payment. But they still divide this loan into two major parts.

Repair Costs

The first part contains all the repairs that you need in the house you are purchasing or just renovating. You need to contact a contractor and let them assess the damage or how much repair your house requires. They then give you a quotation.

As Completed Value

The 2nd part adds the cost of the repair assessed through this quotation method and analyses the increase in the value of the house. The value of the house is based on the present market value.

Final Appraisal

Finally, a veteran affairs loans appraiser will assess these reports and methods and give a final value. Based on this appraised value, they will approve your VA loan application.

Real Life Example

So, if you calculate the closing cost of the house, let's say the value is $155,000. Add the renovation cost to this closing value. If, let's say, the renovation and repair only cost $50,000, the total now stands at $205,000.

Now, if the VA loan appraiser assesses the situation and gives the property a total value of $205,000, the VA Loans Department will approve the lesser amount.

Veteran Affairs Loans Department Approved Contractors

When you are getting quotations or hiring a contractor for the approval of a VA loan, they must be registered with Veteran Affairs. Furthermore, after their registration, they get a VA Builder ID number that you need to mention in your application.

Secondly, they have to follow a strict deadline and complete whatever renovations they are doing within 120 days. This is to stop customers from saving on the side and DIY the project themselves instead of getting the worth of their money in repairs.

The VA loan department makes sure everything is proper by regularly assessing and making inspections to confirm if everything is proceeding as is.

What are Some Veteran Affairs Loans Requirements

One of the first requirements is, of course, that you are a veteran or military serviceman, plus you must get a Certificate of Eligibility approved. This certificate requires you to have maintained a credit score of at least 620. Secondly, either you are living in this renovated house or are going to buy one and will live there.

When it comes to the type of repair for these loans, the following are some examples that fall under this category.

What Differentiates a Rehab and Renovation Veteran Affairs Loans From Standard Loans?

Basically, these loans are fundamentally the same, but the only difference is their name. Veteran Affairs Loans Department gives out Rehab and Renovation loans to veterans. It requires those who want to buy a new rehab which has some renovations required.

The typical VA loans are just that, mortgage loans like typical ones but only approved for veterans.

Pros and Cons of VA Rehabilitation Loan


  • If you already have a running home loan backed by the VA, you have more chances to qualify for a VA rehab loan. This works for cash-out refinancing, too.
  • Even though there is a limit to the number of repairs, it has the highest number of improvements and renovations that you can apply for.
  • Most veteran affairs loans for renovations don’t require down payments.


  • You can only use contractors that are registered with the VA affairs.
  • You are only allowed the loan for repairs, and that, too, will be assessed periodically. Nothing else is allowed to be spent on.
  • No matter the complication of the renovations or repairs, the job must be finished within 120 days.
  • Even if you can find many lenders that qualify for VA-assisted programs, it is totally at their discretion if they want to offer you VA loans.

How to Apply For VA Rehabilitation Loan

  1. Collect all the information you need to apply and then work on getting the documentation ready, such as proof of income, COE, etc.
  2. Do proper research, compare different lenders, and choose the one that best suits your needs.
  3. Once you have all the documentation ready and a lender selected, allow the Appraiser to thoroughly assess your documents, equity, and the amount of Rehab you need.
  4. Wait for the Appraiser and the lending authority to completely calculate what cost estimates will be incurred for this application.
  5. Once the loan is approved, focus on getting the work done so your contractor can efficiently finish the job before the 120-day time limit closes.

Final Words

Be sure to read through all the information that we shared so you have a better grasp of what you need for veteran affairs loans.

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