What can you buy using a VA loan

Can VA loans only be used to buy a home?

No. In addition to the veteran status necessary to be eligible, the website provides information on using eligibility more than once, the types of properties that can be purchased, assuming a VA loan, and the various types of loans that are offered. Any of the following reasons are acceptable as an eligible loan purpose for a VA loan:

to buy a home;
to buy a townhouse or condominium unit in a project that has been approved by the VA;
to build a home;
to repair, alter, or improve a home;
to simultaneously purchase and improve a home;
to improve a home through the installment of a solar heating or cooling system, or other energy efficient improvements;
to refinance an existing home loan;
to refinance an existing VA loan to reduce the interest rate and add energy efficient improvements;
to buy a manufactured (mobile) home or lot;
to buy and improve a lot on which to place a manufactured home that you already own and occupy; and,
to refinance a manufactured home loan in order to acquire a lot.

The VA-guaranteed loan has many of the same benefits and drawbacks as the FHA-insured loan. Down payment requirements are significantly lower than conventional financing, and closing costs may be less. Even though VA loans have no maximum loan cap, they currently top out at about US Dollars 240,000 because of the inability to sell higher-amount mortgages in the secondary market. You will find two charts taken from the Government National Mortgage Association (Ginnie Mae) website on the following pages. The first shows a purchase price of US Dollars 200,000, with US Dollars 25,000 available for a down payment. The second shows the same purchase with no money available for a down payment. You can see that only the VA loan works with no down payment, and then only if the seller pays all the buyer's costs.

You will also find a third chart on page 112, which is taken from the VA website and further compares down payments of different types of loans. This table shows that while a home buyer can qualify for about the same house price with either an FHA or a conventional loan, the down payment requirements are very different. In summary, the VA loan is an excellent loan if the seller is having a problem selling the property. The requirements to qualify for a VA loan - except for eligibility - are more liberal than for a conventional loan. No down payment and allowing the seller to pay closing costs enable the veteran to buy the property when a nonveteran would not qualify.

Can a seller refuse to sell to people using FHA or VA loans?

In a seller's market, there are buyers who qualify for conventional financing. The amount to be borrowed can be much higher and the time to close weeks shorter. As with FHA, a VA loan can be a good loan for the buyer, if a willing seller can be found, but sellers are allowed to choose not to sell to someone with an FHA or VA loan.

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