Change Date

September 15, 2004, Change 4

This section has been changed to create subsection lettering..

a. List of Eligible Loan Purposes

The law authorizes VA to guarantee loans made to eligible veterans only for the following purposes:

·   To purchase or construct a residence to be owned and occupied by the veteran as a home

-   the loan may include simultaneous purchase of the land on which the residence is situated or will be situated

-   loans may also be guaranteed for the construction of a residence on land already owned by the veteran  (A portion of the loan may be used to refinance a purchase money mortgage or sales contract for the purchase of the land, subject to reasonable value requirements.), and

-   the residential property may not consist of more than 4 family units and one business unit except in the case of certain joint loans.  (See section 1 of chapter 7 for this exception.)

·   To refinance an existing VA-guaranteed or direct loan for the purpose of a lower interest rate.

·   To refinance an existing mortgage loan or other indebtedness secured by a lien of record on a residence owned and occupied by the veteran as a home.

·   To repair, alter, or improve a residence owned by the veteran and occupied as a home.

·   To simultaneously purchase and improve a home.

·   To improve a residence owned and occupied by the veteran as the veteran’s home through the installation of a solar heating system, a solar heating and cooling system, or a combined solar heating and cooling system, or through the application of a residential energy conservation measure.

These energy efficiency improvement loans can be made in conjunction with any type of VA purchase or refinancing loan.

·   To purchase a one-family residential unit in a condominium housing development approved by VA.

·   To purchase a farm residence to be owned and occupied by the veteran as a home.

If the loan includes the purchase of farmland, the farmland is appraised at its residential value only.  (See section 12 of chapter 11).