What You Can (and Can’t) Do With a VA Loan

Millions of veterans and military members have access to what’s arguably the most powerful and flexible mortgage option out there.

VA loans require no down payment or mortgage insurance while featuring forgiving credit and underwriting requirements. These government-backed mortgages are more popular than ever in a time of tight lending.

But they’re not the right fit for every military borrower. For as much flexibility and buying power as this benefit conveys, there are also some things you can’t do with a VA loan.

That’s mostly because this is a loan option focused on helping veterans purchase move-in ready homes they’ll live in year round.

Here’s a closer look at what you can—and can’t—do with a VA home loan.

The most common use is to purchase or refinance a single-family home.

But eligible buyers can also purchase a condo, provided the unit is in a VA-approved development. Falling in love with an unapproved condo isn’t necessarily the end of the line. A lender may be able to help you get the development approved, but the process can take some time.

Borrowers can also use a VA loan to buy a modular home or purchase up to a four-unit property as long as they live in one of the units.

You can seek a VA loan for new construction and even manufactured housing, too. Making either of these work on the ground can be challenging.

The VA basically insures a portion of each loan, leaving it up to private lenders to actually make them. Lenders can tack on additional requirements or simply not offer certain options. It can be tough to get a $0 down VA loan for either of these property types.

Unacceptable uses

The VA wants veterans using this program for primary residences. You can’t purchase or build a vacation home or a purely investment property with a VA loan.

New construction is possible, but veterans can’t simply purchase a plot of land with the intent to build a home some day. You also can’t use this as a business loan. Again, the focus is on primary residences.

The VA will only back loans in the U.S. and its territories. Any other overseas purchase is a no-go.

Challenging uses

There’s an array of potential properties and circumstances that may or may not work for some VA lenders. Manufactured homes and new construction are common examples.

But VA buyers can also run into issues when trying to purchase unique homes (think geodesic dome) or properties containing income-producing attributes, like a working farm.

Communicate early and often with a real estate agent and a lender if you’re considering more offbeat properties.