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VA Loan Library Comments

Buying a Condo With a VA Loan

Borrowers can use their VA home loan benefits to purchase a condominium. But there are some additional requirements that differ from purchasing a single-family residence or a multiunit property.

A condo complex must be approved by the VA in order for a borrower to purchase a unit. Hundreds upon hundreds of condo developments across the country are already on the approved list.

You can check the VA’s condo database online to see if the unit you want to purchase is in an approved development.

VA Condo Approval Process

What happens if the condo you hope to purchase isn’t in a VA-approved development?

There are a couple different solutions.

One is to see if the development already has approval from the U.S. Department of Housing and Urban Development (HUD) or the U.S. Department of Agriculture (USDA).

These two government agencies respectively oversee the FHA and USDA loan programs and also require condo approval. The VA can accept a development that’s already been approved by these agencies as long as that approval came before Dec. 7, 2009.

Otherwise, borrowers can ask their lender to seek approval from the VA for the condo development they want. The lender will need to make a written request for approval and include a copy of the condo’s organizational documents.

These can include:

  • Declaration of covenants, conditions and restrictions
  • Homeowner association bylaws and budget
  • Plat, map or air lot survey
  • Special assessments and litigation statement
  • Minutes of the last two homeowner association meetings
  • Current financial and litigation statements

Condo developments are under no obligation to provide this documentation.

Legal & Occupancy Concerns

In addition, the VA encourages lenders to include an attorney’s opinion letter stating the condo development meets VA requirements.

The VA will want to ensure the condo development doesn’t put any undue burden or restrictions on veterans or lenders. One example is if the development has rules in place that prevent foreclosure or resale of a property without approval from the homeowners association. Deed restrictions like that will typically be a problem.

Communities with age restrictions can also be challenging. With something like an “Over 55” development, for example, lenders and the VA will need to take a closer look at the community’s organization documents. Lenders want to ensure these communities are compliant with fair housing and lending laws and don’t impact the future marketability of the property.

Unit occupancy can also come under scrutiny. When a development is first under consideration for approval, lenders may require that a certain percentage of the condo units are either sold or under contract.

The same can hold true for developments that have already been approved by other government agencies.

VA Condo Approval Timelines

VA officials will review the request and paperwork and either approve or deny the development or alert the lender regarding missing documents or other issues that can be addressed and resubmitted.

It’s important to know going in that this process can take months. Lenders won’t be able to order an appraisal on the property until approval is granted. Don’t expect to rush through the condo approval process if you’re in need of a quick closing.

Talk with a Veterans United loan officer at 855-259-6455 if you have questions about buying a condo with your hard-earned VA loan benefits.

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