VA Home Loan Rules For “Real Property”

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Written by J. Wallace Jr.   
Tuesday, 11 June 2013 08:49

One of the basic rules of the VA loan programs is that loans can only be issued for “real property”. A borrower can apply for a VA loan to purchase a suburban home, condominium, duplex, modular home, a mobile home, or even a multi-unit property.

But borrowers are not permitted to apply for VA loans to purchase non-real estate type items including houseboats, recreational vehicles or any other dwelling not meant to be fixed to a permanent foundation.

“Real property” is what secures the VA mortgage, and while some borrowers may see an RV or houseboat as a dwelling, it does not count as real property in the eyes of the law. That’s what the VA loan rules are concerned with--the status of the dwelling purchased as real property.

When it comes to mobile homes (not RVs) the VA does allow VA loans for a mobile or modular home that is to be fixed to a permanent foundation. VA mobile home loans have a few unique rules and requirements your lender can explain to you.

VA home loans are also prohibited from any purchase aside from real estate-related transactions. That means there is no VA loan program for personal loans, small business, etc.

VA loan rules DO permit the refinance of non-VA mortgages. You can refinance a conventional home loan or subprime home loan using a VA refinance loan. Borrowers cannot use the VA Interest Rate Reduction Refinancing Loan program to do this, but the VA Cash-Out Refinance program can refinance any type of home loan.

While borrowers are permitted to get cash back on a VA Cash Out Refinance Loan, there is no cash back to the borrower with either a new purchase VA mortgage or a VA IRRRL. These transactions only permit money back to the borrower in the form of a refund for money paid up front for things later included in the loan amount. There may also be a refund for borrowers who paid the VA loan funding fee but were later found to be exempt from having to pay that fee. Discuss that situation with your loan officer if it may apply to you.