Just what can you put that VA home loan money toward, anyway? What’s restricted and what’s allowed when it comes to buying property, and what other uses might there be for VA home loan funds that qualified parties should look into?

Whether you’re a recently deployed service member trying to purchase a home, a military widow surveying her options, or belong in some other category entirely, Mortgages.com has the answers you’re looking for.

What Can I Buy with a VA Loan?

Generally speaking, borrowers are restricted to purchasing residences that can be moved into as soon as possible—that are in what our partners at Veterans United call “move-in ready condition.”

If your home-to-be fits under one of these five categories, and it’s “move-in ready,” then it will likely qualify for financing through your VA-approved third-party lender.

  • Traditional single-family home
  • Townhouse or condo in a VA-approved housing development
  • Multi-unit or “multi-family” home (like a duplex)**
  • Mobile or manufactured home
  • Rural home or farm house

**Borrowers can buy “multi-family” properties so long as they contain four units or fewer. You must use one of those units as your primary residence in order to qualify for a loan.

On the mobile home front, the property in question must measure at least 24 feet wide (however, lenders aren’t usually too keen on issuing loans for these types of residences).

VA loans can, as it turns out, be used to build new homes. But it can be difficult, if not impossible, to locate an approved third-party lender willing to take on that kind of financial risk. There is a workaround for this: secure funding from a local financial institution to build, then refinance that loan through the VA with their Cash-Out Refinance Loan option.

Is There Anything I’m Not Allowed to Buy with a VA Loan?

If you’re interested in nontraditional housing, purchasing a home abroad, or securing property for investment purposes—whether it’s for renting, farming, or some other business-related purpose—then the VA home loan program is probably not for you.

The VA prohibits borrowers from

  • Buying a second home or vacation property
  • Buying co-ops, RVs, houseboats, and other “unconventional” properties
  • Buying homes that are not installed on a permanent foundation
  • Buying homes in foreign countries (though the VA does permit borrowers to purchase homes in the Virgin Islands, Puerto Rico, the Northern Mariana Islands, Guam, American Samoa, and other US territories)
  • Buying investment property
  • Using their home loan as a business loan
  • Buying farmland that doesn’t have a home on the property

Why all of the restrictions?

The objective isn’t for borrowers to build personal wealth, or to finance business development projects.

The VA wants to support qualified veterans in their quest to become homeowners—to provide them with a greater sense of stability and security through this American rite of passage.

Can I Use My VA Loan Benefits While I’m Deployed?

Giving a trusted friend, family member, or legal advisor Power of Attorney (POA) is the only way to purchase a home while you are deployed.

Getting Power of Attorney

In essence, getting power of attorney means that you’ve agreed to have a representative sign important legal documents in your stead. It’s the perfect tool for service members on active tours of duty.

There are two types of POA—General and Specific. Giving your representative General POA means they can act on your behalf in an array of different legal situations. Specific POA restricts your representative to a preordained set of duties while you are away.

Real Estate Power of Attorney

VA-approved third-party lenders generally mandate that borrowers who are deployed utilize Real Estate Specific POA when it comes to home buying matters. They’re going to want you to provide the following in your POA contract:

  • The amount of money you’re borrowing
  • The physical address of the home itself
  • How much the home costs
  • When you expect to close on the property
  • A clearly articulated reason for the POA

Once you have a Real Estate Specific POA in place, home buying will finally be a possibility even though you’ll be serving overseas.

We'll walk you through it: Get answers to more of your POA-related questions

I’ve Signed a Purchase Agreement for My New Home. What’s Next?

First, you’ll submit a copy of the purchase agreement to your lender, who will then contact the VA, so they can conduct a thorough appraisal of the property.

The appraiser from the VA will inspect your property with the following questions in mind:

  • Is the price that you, the borrower, have committed to pay consistent with the actual value of the home?
  • Is the property in compliance with the VA’s Minimum Property Requirements (MPRs)? What are the VA’s MPRs, anyway? The property must
    • Be residential, not intended for commercial use
    • Have functioning water, electric, sewage, heating, and cooling systems**
    • Have enough space for the borrower and his or her family to cook and sleep safely
    • Be clear of any animal or insect infestations
    • Be accessible through a permanent easement, or a durable, all-weather driveway
    • Have a sturdy foundation, basements and crawlspaces free of water damage, and a strong roof that is in good condition

Once you have successfully passed this appraisal, you should get approved by the underwriter. Then you’re ready to close—you’ll sign a final batch of documents, pay your closing costs and begin settling into your new home.

**Homes that source their water from wells will need to provide evidence that their water is potable; on the heating front, the VA mandates that properties have systems that can warm the interior of the home to a temperature of at least 50 degrees Fahrenheit.

If I Move, Can I Use My VA Home Loan Benefit Again?

The VA does not cover the whole price of your home. The money that the VA guarantees on your loan, known as your “entitlement,” is usually one of the following dollar amounts:

  • $36,000
  • $68,250 (reserved for homes that cost in excess of $144,000)

When you purchase property through the VA home loan program, you are going to end up using some—if not all—of this entitlement money.

Once you pay off your original loan in full and sell your old property, you can apply for a Restoration of Entitlement, which will replenish the amount of money that the VA can guarantee for subsequent home purchases. (Veterans who have paid off their loan but still own the property can apply for a special One-Time Restoration of Entitlement.)

The long and short of it is this: access to VA home loan benefits does not expire. As long as you pay off your debts, you can utilize the program again and again in perpetuity. If you’re unsure of where you stand with respect to your entitlement, check your Certificate of Eligibility for an exact number.