Can You Buy a Fixer-Upper with a VA Loan?
Yes. Veterans can buy homes that need work through two options. Use a standard VA loan when the property needs minor fixes to meet minimum property requirements. For larger projects, choose a VA alteration and repair renovation option that wraps purchase and improvements into one loan. Lenders manage draws, a final appraisal must confirm completion, and health and safety standards must be met for the VA guaranty.
Quick Facts
- Traditional VA purchases can include repair escrows; health, safety, and habitability items must be resolved.
- VA renovation (alteration & repair) loans can finance purchase plus improvements in one loan structure.
- Contractors typically must be registered with VA; lenders manage draws and final inspection requirements.
- Luxury add-ons generally aren’t eligible; improvements must be ordinary for similar homes and communities.
- Energy Efficient Mortgage add-ons may finance up to $6,000 in approved energy upgrades where appropriate.
Mini FAQ
Is a “VA renovation loan” an official VA program?
VA allows loans “for alteration and repair” in conjunction with a purchase or a cash-out refinance. Lenders implement this as a renovation option with escrowed funds, contractor oversight, and a final inspection. The term “VA renovation loan” is common marketing language; VA’s handbooks call it “alteration and repair.”
Can I do the work myself?
Typically, no. For alteration-and-repair cases, the builder or contractor must be registered with VA and meet state licensing requirements. Lenders also control draw disbursements, so self-performed work rarely fits. Your lender will confirm contractor ID, permits, and inspection schedules before releasing funds.
Are structural fixes allowed?
VA focuses on livability, utility, and safety. Luxury items (like pools) are out, but necessary work that protects or improves basic livability may be eligible. Final eligibility depends on appraised “as-completed” value, local permitting, and lender overlays that can further limit scope or timelines.
- Two paths: traditional VA purchase with MPR repairs, or alteration-and-repair renovation financing.
- Lenders manage repair escrows, contractor draws, and final inspection before VA guaranty is issued.
- Eligible improvements emphasize livability and safety; luxury features and add-ons are ineligible.
- Energy Efficient Mortgage add-ons can finance targeted upgrades up to six thousand dollars.
- Not all lenders offer VA renovation; ask about overlays, caps, timelines, and eligible work.
- Compare against FHA 203(k) or a later VA cash-out refinance when scope or timelines exceed limits.
Can you buy a fixer-upper with a VA loan in 2026?
Yes—via a traditional VA purchase (with required repairs handled through the contract or a repair escrow) or a VA alteration-and-repair structure that rolls purchase and improvements into one loan. In both cases, VA’s Minimum Property Requirements (MPRs) control health, safety, and habitability, and a VA fee appraiser checks compliance before the guaranty is recognized. See VA guidance on alteration-and-repair loans and MPRs for the full framework. Handbook Ch. 7 (A&R); MPRs Ch. 12.
- Traditional purchases suit homes with minor issues, where the seller completes or escrows repairs so the property meets MPRs by the time the loan is guaranteed; lenders may allow limited post-closing escrows, but VA requires completion and a satisfactory final inspection before guaranty issuance.
- Alteration-and-repair purchases suit homes needing defined, financeable improvements. Lenders escrow funds, release draws to registered contractors, and require a VA fee appraiser’s final signoff of the as-completed condition before reporting and guaranty. Value and acquisition-cost tests limit how much you can finance.
What is a “traditional” VA purchase on a home needing minor repairs?
With a standard VA purchase, the home must meet MPRs addressing safety, structural soundness, sanitation, and basic utilities. If the VA appraiser calls out required repairs, the parties can negotiate who completes them and when. Lenders can escrow limited repairs, but funds must cure the issues and be disbursed before the guaranty is finalized. MPRs Ch. 12.
- “As-is” listings can work only if the property already meets MPRs or a clear, permitted plan funds and completes the required fixes on schedule; otherwise, the loan cannot be guaranteed, and closing or pooling the loan into the secondary market will be delayed or denied.
- Lead-based paint, defective roofs, unsafe wiring, inoperable heat, or active leaks will trigger conditions. Sellers who fix early usually avoid re-inspections, while buyers who accept escrow responsibility should expect strict timelines and documentation to clear lender and guaranty requirements.
How do VA alteration-and-repair (“renovation”) loans actually work?
VA expressly permits loans for “alteration and repair” in conjunction with a purchase or a cash-out refinance. Lenders escrow the improvement funds, verify contractor credentials, and disburse draws as work progresses. The Veteran signs off on draws, the VA appraiser performs a final inspection, and the loan is guaranteed after the as-completed condition meets MPRs and notice-of-value requirements. Circular 26-18-6.
- Budget math uses the lesser of “as-completed” value or “acquisition cost” (purchase price + repair costs + allowable fees + any contingency up to fifteen percent). This cap keeps the financed amount aligned with market value and reduces risk that over-improvements will outstrip comparable homes.
- Lenders maintain custodial escrow accounts for improvement funds, track inspections, and report the loan for guaranty only after a clear final inspection. Change orders require re-review and, if value changes materially, an updated appraisal—so scope discipline saves time and cost.
Which repairs are eligible—and what’s off-limits under VA rules?
Eligible improvements must be “ordinarily found” on similar properties of comparable value and must improve basic livability or utility. VA guidance rejects luxury features (for example, pools or barbecue pits) under supplemental/repair authorities. Energy-efficiency items can be financed separately via an Energy Efficient Mortgage (EEM) add-on. Handbook Ch. 7 (A&R); 38 C.F.R. § 36.4359.
- Think health, safety, and functionality first: roofs, HVAC, windows, plumbing, electrical, accessibility, and repairs that restore utility. Luxury or purely aesthetic upgrades are not eligible within VA’s repair authorities, although lenders may separately allow cosmetic items when paired with functional repairs.
- Energy Efficient Mortgages can add up to six thousand dollars for defined energy upgrades. Lenders must confirm reasonableness and that payment changes are offset by expected utility savings within guidance thresholds for smaller and larger energy-improvement budgets.
Do I need a VA-registered contractor, and how fast must work be finished?
Yes, for alteration-and-repair cases the builder or contractor must have a VA builder identification number, be properly licensed, and meet lender requirements. Lenders set draw schedules and timelines; VA requires a clear final inspection before guaranty. Many lenders target completion within a few months, but the exact deadline is a lender overlay—not a universal VA rule. Circular 26-18-6.
- Self-performed work typically does not qualify because lenders must control draws to registered, insured contractors, and VA’s process hinges on third-party oversight and permits. If you are licensed, discuss feasibility early; most lenders still require an independent contractor of record.
- Ask your lender to provide a written progress-inspection calendar and final inspection trigger. Align permits, utility turn-ons, and material lead times with that schedule to avoid change orders and re-inspections that add costs or push the guaranty date back unexpectedly.
How are appraisals and MPR repairs handled on fixer-uppers?
VA assignments go to fee appraisers who both estimate value and check MPRs. For alteration-and-repair loans, the appraisal analyzes the “as-completed” plan and comparable data. For traditional purchases, the appraiser lists any conditions that must be satisfied. Lenders may escrow repairs, but all MPR issues must be cured and inspected before guaranty. Appraisal Ch. 10; MPRs Ch. 12.
- Provide the full, signed purchase contract and a complete scope of work to your lender so the appraiser can analyze concessions, credits, and renovations accurately. Hidden side deals complicate valuation and can trigger reconsiderations, re-disclosures, or even underwriting resets late in the process.
- Plan for re-inspection if required items aren’t visible or complete at the first visit. Simple fixes—handrails, GFCIs, minor leaks—are easier to close out when handled before the initial appraisal rather than forcing a return trip that compresses your lock and closing timeline.
How do lender overlays change VA renovation options?
VA sets the baseline, but lenders layer overlays: some cap total repair budgets, limit structural work, require faster completion windows, or restrict property types. Not all lenders offer VA alteration-and-repair loans. Ask pointed questions about caps, timelines, eligible scopes, and appraisal expectations—and request overlays in writing. VA Handbook hub.
- Request a side-by-side quote: traditional VA with repair escrow versus VA alteration-and-repair. Compare interest rate, fees, contingency reserve rules, and required inspections. A simpler traditional path often wins when needed repairs are narrow and easily completed before guaranty.
- If a lender advertises hard caps (for example, fifty thousand dollars) or forbids certain work categories, those are lender policies, not VA statutes. Shop at least three lenders and include one regional and one national platform that regularly processes VA renovation cases.
When is FHA 203(k) or a later VA cash-out refinance a better fit?
If your scope is broad, structural, or the market lacks VA renovation lenders in your area, FHA’s 203(k) can be an alternative—though it adds mortgage insurance and different appraisal rules. Another path: buy with a standard VA loan, complete minimal MPR work, then later use a VA cash-out refinance or supplemental loan to fund additional improvements. HUD 203(k); VA Ch. 6; Supplemental loans.
- FHA 203(k) supports structural rehab with standardized consultant roles and escrow controls, but monthly cost differs due to mortgage insurance. Run a full cost comparison—including points, fees, and mortgage insurance—before selecting a path based purely on scope flexibility.
- VA supplemental loans focus on improving basic livability or utility and exclude luxury features. Sequence matters: confirm entitlement, lien position, and value support before stacking cash-out or supplemental financing to avoid surprises on title, fees, or secondary-market eligibility.
What documents and steps should you line up first?
Treat renovation cases like a construction loan on a smaller scale. Create a clean, lender-ready packet: scope of work, line-item budget, permits plan, contractor license and VA builder ID, insurance, draw schedule, and contingency reserve. Then standardize quotes across lenders (same lock, term, points) to judge pricing fairly. Circular 26-18-6.
- Ask your contractor to produce a single PDF that includes license, VA builder ID confirmation, insurance certificates, W-9, detailed bid with materials and labor, and a timeline. Lenders move faster when they can vet a complete package without multiple back-and-forths for missing items.
- Request a lender-written draw plan showing inspection triggers and expected turn times for disbursements. Align material orders and trades to those gates to avoid idle time and lock extensions; budget a modest contingency so supply changes or discoveries don’t derail completion.
Which option fits your fixer-upper? (Quick comparison)
| Path | Best For | Scope Allowed | Key Rules |
|---|---|---|---|
| Traditional VA + repair escrow | Minor MPR issues cured quickly by seller or via escrow | Health/safety fixes; basic utility repairs; limited post-closing escrows | All MPR items completed and inspected before guaranty; re-inspection may be required |
| VA alteration-and-repair (renovation) | Defined projects where value supports as-completed scope | Improvements “ordinarily found” for similar homes; no luxury features | VA-registered contractor, lender-managed draws, final appraisal signoff before guaranty |
| FHA 203(k) (alternative) | Broader rehab including structural under FHA rules | Structural and non-structural; MI required; FHA consultant framework | Different appraisal/MI costs; check lender capacity and current FHA timelines |
VA fixer-upper FAQs
Do I need the seller to finish all repairs before closing?
Not always. Lenders may allow limited repair escrows, but all called-for MPR items must be completed and inspected to obtain or keep VA guaranty. Many sellers finish items before appraisal to avoid re-inspections and timeline pressure. MPRs Ch. 12
Is there a dollar cap on VA renovation budgets?
VA does not set a single nationwide renovation cap for alteration-and-repair, but value must support the loan amount and lenders impose overlays (for example, internal caps, timeline rules, or eligible-work limits). Always ask lenders to disclose overlays in writing. Handbook hub
Can I add energy upgrades?
Yes. VA Energy Efficient Mortgage (EEM) provisions let lenders add up to $6,000 for approved energy improvements when requirements are met. Lenders must determine reasonableness and assess payment-to-savings dynamics per guidance. Handbook Ch. 7 (EEM)
Who pays for required repairs?
Negotiable. Contracts often place responsibility on the seller for MPR-related fixes, but buyers can assume escrows or choose alteration-and-repair financing. Your lender still controls draw disbursements and documentation, regardless of who ultimately pays. Appraisal Ch. 10
Citations Used
- VA Lender’s Handbook — Chapter 7 (Loans for Alteration & Repair; EEM rules): benefits.va.gov
- VA Circular 26-18-6 (A&R processing; contractor registration; escrow draws; as-completed value): benefits.va.gov
- VA Lender’s Handbook — Chapter 12 (Minimum Property Requirements; repair escrow/guaranty timing): benefits.va.gov
- VA Lender’s Handbook — Appraisal guidance (contract analysis; final inspections): benefits.va.gov
- 38 C.F.R. § 36.4359 (Supplemental loans must improve basic livability or utility; no luxury features): law.cornell.edu
- HUD 203(k) official program page (FHA rehab alternative, structural allowed under FHA rules): hud.gov
The Bottom Line
A VA fixer-upper is doable—and often smart—when you match the tool to the scope. Use a traditional VA purchase when repairs are narrow and easily finished; choose alteration-and-repair when value-supported work needs lender-managed draws. Expect a VA-registered contractor, escrow controls, and a final appraisal signoff before guaranty. Because lenders add overlays, shop three quotes, request those overlays in writing, and align permits, schedules, and materials to the draw plan. If your scope exceeds VA renovation appetites, compare FHA 203(k) or plan a later VA cash-out or supplemental loan once you stabilize.
Levi Rodgers is the Founder of VA Loan Network, a leading resource for Veteran homebuyer education. A Retired Green Beret and Broker-Owner of LRG Realty in San Antonio, Levi leverages his military discipline and real-world real estate expertise to provide Veterans with expert loan advice, guidance, and trusted financial leadership.
