Va Loan For A Camper: Is It Possible?

VA loans are available for multiple property types, but can you use one to buy a camper? The short answer is no. The VA does not allow borrowers to use a VA loan to finance a camper, even if you plan on living in it. This is because the camper doesn't meet the minimum property requirements set out by the VA. However, if you're in the market for a camper, there are other financing options available to you.

Can I use a VA loan to buy a camper?

VA loans are available for multiple property types, but they cannot be used to purchase a camper or RV. This is because they do not meet the minimum property requirements set out by the VA. For example, the property must be classified as real property with a permanent foundation, which campers and RVs do not have.

However, if you are set on purchasing a camper or RV, there are other financing options available to you. For example, you could use a VA cash-out refinance loan to borrow against the equity in your home. This allows you to tap into your home equity and use the proceeds to purchase a camper or RV. It's important to note that you must meet the VA's eligibility requirements for a cash-out refinance loan, including occupying the home as your primary residence.

Another option is to take out a conventional loan, a chattel loan, or a personal loan. A conventional loan typically requires a 5% down payment and a credit score of 620 or higher. Chattel loans are used for personal property and have higher interest rates than traditional mortgages. Personal loans are unsecured, meaning there is no collateral, and they also tend to have higher interest rates.

It's worth noting that financing a camper or RV as a primary residence can have tax benefits, such as deducting loan interest on your taxes. However, there may also be higher insurance costs and longer loan repayment terms.

What are the requirements for a camper to be eligible for a VA loan?

To be eligible for a VA loan, you must meet the minimum service requirements set by the Department of Veterans Affairs (VA), have a valid Certificate of Eligibility (COE), and satisfy the lender's credit and income requirements.

To meet the minimum service requirements, you must have served for at least 90 continuous days during wartime or 181 days during peacetime. Alternatively, you must have served for six years in the National Guard or Reserves or served 90 days (at least 30 of them consecutively) under Title 32 orders.

If you are the spouse of a service member, you may still be eligible for a VA loan if your spouse died while serving or due to a service-related disability.

To obtain a COE, you can apply through a VA-approved lender, online through the VA's eBenefits portal, or by mail with VA Form 26-1880. This document verifies that you qualify for VA loan benefits and meets the minimum service requirements.

In addition to the COE, you must also meet the lender's credit and income loan requirements to receive financing. While the VA does not set a minimum credit score requirement, most lenders typically require a credit score of 620 or higher. The VA also requires qualified veterans to maintain a certain amount of income, known as residual income, to ensure they can meet all financial obligations.

It is important to note that VA loans are only available for certain property types and cannot be used to purchase a boat or RV. The property must be classified as real property with a permanent foundation and meet the VA's minimum square footage requirement.

What are the benefits of using a VA loan to buy a camper?

Unfortunately, you cannot use a VA loan to buy a camper. This is because the VA has strict criteria, called minimum property requirements, to determine what constitutes a primary residence.

However, if you are still interested in purchasing a camper, there are other ways to utilise your VA loan benefits to achieve that goal. Here are some benefits of using a VA loan to indirectly finance your camper purchase:

No Down Payment Required

VA loans do not require a down payment, which can be a significant advantage for Veterans and service members who may not have the financial means to put down a large sum of money upfront. This makes homeownership more accessible and helps Veterans and their families lay down roots as they reintegrate into civilian life.

No Private Mortgage Insurance (PMI) Required

VA loans also do not require private mortgage insurance, which is typically mandatory for conventional loans with down payments of less than 20%. This can result in substantial savings for borrowers as PMI can add a significant cost to the monthly mortgage payment.

Competitive Interest Rates

VA loans offer competitive interest rates, which can make homeownership more affordable for Veterans. Lower interest rates mean lower monthly payments, making it easier for Veterans to manage their finances and plan for the future.

VA Cash-Out Refinance Option

While you cannot directly use a VA loan to purchase a camper, you can use the VA cash-out refinance option. This allows you to refinance your existing home loan into a larger one, withdrawing your home's equity as cash. You can then use this cash to purchase a camper while still enjoying the benefits of VA loan financing on your original home purchase.

It is important to note that refinancing into a larger loan will result in larger monthly payments and increased total interest payments over the life of the loan. Additionally, as campers are depreciating assets, borrowing a large sum of money to purchase one may not provide long-term benefits. Therefore, it is essential to carefully consider the costs and benefits before deciding to use a VA cash-out refinance for this purpose.

What are the drawbacks of using a VA loan to buy a camper?

Although VA loans are typically more flexible than traditional mortgage options, there are some drawbacks to using a VA loan to buy a camper. Here are some considerations:

• Minimum Property Requirements: VA loans have strict criteria, known as Minimum Property Requirements (MPRs), to determine what constitutes a primary residence. One of the requirements for MPRs is that the property must be classified as real property, meaning it must have a permanent foundation. Campers, or RVs, do not meet this requirement and are therefore disqualified from being purchased with a VA loan.
• Square Footage Requirement: In addition to the permanent foundation requirement, campers also fail to meet the VA's minimum square footage requirement, making them an unauthorized property type for VA financing.
• Limited to Primary Residences: VA loans can only be used to purchase primary residences. You cannot use a VA loan to buy a second home or investment property.
• Funding Fee: While VA loans do not require mortgage insurance, there is a funding fee that must be paid at closing. This fee can be financed into the loan, increasing the total amount owed. The funding fee is typically around 2.15% of the loan amount for first-time VA loan borrowers who put down less than 5%.
• Less Equity to Start: With a VA loan, you can become a homeowner without a down payment. However, this also means you start with less equity in your home, which can take longer to build up. If property values fall, you may end up owing more on the mortgage than the home's worth, making it harder to sell or refinance.
• Stricter Appraisal Process: VA loans have a stricter appraisal process to ensure that the property meets the Minimum Property Requirements regarding safety, structural integrity, and health hazards. Any issues discovered during the appraisal must be resolved before financing is approved.

What are alternative financing options for buying a camper?

VA loans are not available for financing a camper, RV, or boat. However, there are alternative financing options for buying a camper. Here are some options to consider:

Secured and Unsecured Loans

Secured and unsecured loans are the two main types of loans available for camper financing. Secured loans use the camper as collateral, which can result in lower interest rates and longer repayment terms. However, secured loans come with the risk of repossession if you fail to make payments. Unsecured loans, on the other hand, do not require collateral, but typically have higher interest rates and shorter repayment terms.

RV Loans

RV loans are a type of installment loan specifically designed for purchasing recreational vehicles. These loans can be obtained from banks, credit unions, or online lenders and typically have repayment terms ranging from one to 20 years. It's important to note that RV loans often come with higher interest rates and fees compared to other types of financing.

Personal Loans

Personal loans can also be used to finance a camper purchase. These loans are based on your credit score, income, and credit history. Personal loans for campers are offered by banks, credit unions, online lenders, and dealerships, with typical repayment terms ranging from two to seven years. It's worth noting that personal loans may have higher interest rates and fees compared to other options.

Home Equity Loans

If you own a home, you can consider using a home equity loan to finance your camper purchase. This option allows you to borrow against the equity in your home and typically offers lower interest rates and longer repayment terms of up to 30 years.

Saving and Paying in Cash

Another option is to save up and pay for the camper in cash. This approach can help you avoid interest accrual and fees associated with loans. Consider purchasing a pre-owned or older model camper to reduce the cost.

Renting

If you don't plan on using the camper frequently, renting may be a more cost-effective option. Renting allows you to enjoy the benefits of an RV without the financial burden of ownership.

Frequently asked questions