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VA Loan Energy Upgrades

By: Grant Moon 04/30/13 12:57 pm

VA Loan Energy Upgrades

The VA home loan can be used to purchase a property, refinance an existing VA home loan with a VA streamline or pull equity out of the property with a VA cash out mortgage. But you can also refinance a home loan to a lower rate while at the same time borrowing funds to make energy efficient improvements to the home.

VA loans, just like other loans, have specific limits with regard to loan size. While the VA doesn’t’ specifically set a maximum loan amount, loan amounts are set by VA lenders with most common maximum VA loan amount established at $417,000 and higher in certain areas deemed “so-called” high cost.

VA refinance mortgage loans are limited to 100 percent of the current value of the property, including the funding fee. However, VA loans can also include an additional amount up to $6,000 if the funds are used to make energy improvements to the home.

This benefit is designed to not simply provide energy efficient improvements to the property but those improvements will reduce the borrower’s monthly utility bills, making the home even more affordable.

What types of improvements qualify for the $6,000 energy efficient mortgage?

This program provides funds to replace a heating or air conditioning system, install insulation, install solar heating equipment and even funds to caulk and replace windows with five-star energy efficient windows.

This program is often overlooked by VA borrowers as an option but is something that should be explored, especially if an existing home could use a new heating and air conditioning system, something that could cost $3,000 or more to upgrade.

There are specific guidelines the borrower must follow so when applying for a VA loan with energy efficient funds, let your VA lender know in advance so you can provide the needed documentation.


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