VA Pamphlet 26-7, Revised
Chapter 3: The VA Loan and Guaranty
3-5
2. Eligible Loan Purposes
Change Date
November 8, 2012, Change 21
• This section has been updated to make minor grammatical edits.
• Subsection a has been updated to remove information on cooperative units.
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, including a condominium unit 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 four 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).
Continued on next page