Can You Get A VA Loan For A Condo?” And Other VA Property-Type Questions
In today's housing market, there are tens of "home types" from which a buyer can choose. Among the most common are condos, single-family homes, and multi-unit properties. The list of "most obscure" includes geodomes, log cabins, and homes carved into a mountain.
For military borrowers, it's important to know which homes are lendable via the VA loan program. Not all property types will secure a bank's final VA approval.
The Department of Veterans Affairs is explicit regarding allowable property types. Here's what you need to know.
VA Loans : Most Home Types Eligible For Financing
VA loans are special, government-backed mortgages, first available via the G.I. Bill in 1944. VA loans were created to help military veterans transition from war and into homeownership, among other reasons.
Nearly 80 years later, the program still offers subsidized mortgage rates and reduced underwriting standards, which has resulted in more than 20 million total VA loan closings.
VA loans can be applied to many specific home types. For example, a VA loan can be used to:
- Buy an existing house or condo
- Buy a house or condo that's being newly built
- Buy a duplex, triplex or four-unit property
VA loans can also be used to buy a manufactured home or to buy a lot for a manufactured home. However, in order to be VA-eligible, a manufactured home, whether existing or new, must be classified and taxed as real estate, specifically. It also must be affixed to a permanent foundation and comply with your local building codes and zoning laws.
A manufactured home can be VA-eligible even if the home or foundation isn't ready yet.
Furthermore, for the above property types, VA loans can be used to make home repairs or improvements, and to make energy-efficiency improvements to a home.
To be VA-eligible, homes for purchase or refinance must be located in the United States or a U.S. territory or possession, such as Puerto Rico, Guam or the U.S. Virgin Islands. Properties in foreign countries aren't eligible for VA loan approval.
Occupancy Rules For VA Loans
Like all mortgage types, VA loans carry occupancy standards.
For example, if you want to buy a home with a VA loan, you'll have to certify that you -- or your spouse -- will occupy the home as your primary personal residence. This means that you intend to live in the home.
If you're buying a 2-unit, 3-unit or 4-unit property, you will need to live in one of the two, three or four units.
The VA occupancy requirement does not mean you'll have to live in the home forever, or even for as long as you keep your VA loan. It's enough that you intend to occupy the home, move in after your purchase closing settlement, and continue to live in the home for some period of time.
The exception to the VA's occupancy rules is for refinances via the Interest Rate Reduction Refinance Loan (IRRRL). Also known as the VA Streamline Refinance, the IRRRL program allows for vacation homes and investment properties. The only VA occupancy requirement is that you did live in the refinanced home at some time in the past.
VA Loan Appraisals And Inspections
Lastly, for all VA-approved properties, a specific VA home appraisal is required.
As part of the VA approval process, a property appraiser will tour the subject home's interior and exterior, then compile a valuation report known as an appraisal. The appraisal is submitted directly to your lender who can then forward the appraisal to you upon request.
The property's appraised value is important because it's used as collateral for your loan.
As part of the appraisal process, an appraiser may identify major faults within the home and recommend that repairs be made. A "major fault" includes a broken roof, faulty electric wiring, or any other defect which may adversely affect the value of the home.
Minor repairs such as "a missing screen window" are not part of the appraisal process and, because your home appraisal is not a substitute for a home inspection, it's recommended that you commission a home inspection from a reliable home inspector.
The home inspector's report will address your home's major components, such as the plumbing, heating and cooling, and electrical systems and the roof. Your REALTOR® can typically make a home inspection referral, if you don't know who's best for the job.
Get Today's VA Mortgage Rates
VA loans offer a lot of benefits as compared to conventional financing and FHA-backed loans. Via the VA, there's no down payment required, there's never any mortgage insurance to pay and underwriters allow for flexible qualification standards.
In addition, because they're government-subsidized, VA loans can offer lower interest rates and closing costs than other loan types. If you're eligible for a VA loan, it's worth considering for any specific "home type".
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