Buying a condominium with you VA home loan benefit is a great option. However, there are additional requirements that differ from purchasing a single-family residence or a multiunit complex.
Borrowers can use their VA home loan benefit to purchase a condominium. However, there are some additional requirements that differ from buying a single-family residence or a multi-unit property.
The VA must approve a condo complex in order for a borrower to purchase a unit. The good thing is hundreds of condo developments across the country are already on the approved list. It’s also possible to turn an unapproved development into an approved one.
You can check the VA's condo database online to see if the unit you want to purchase is in an approved development.
What happens if the condo you hope to purchase isn't in a VA-approved development? There are specific steps you can take to receive condo approval and it’s important to understand:
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 may include:
It's important to note that condo developments are under no obligation to provide this documentation.
The VA doesn't publish its guidelines on condo approval conditions, but Minimum Property Requirements play a great part. Also, lenders may have their own requirements on top of what the VA wants to see.
Here are a few possible considerations:
Talk with a Veterans United loan specialist for more details.
VA officials will review the request and paperwork and either approve or deny the development's eligibility 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 sometimes 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 need a quick closing.
The VA has different approval statuses depending on the condition of the condo complex and whether or not it meets the requirements. Let’s take a look at each approval status and next steps:
This approval status means your condo development is approved, and you may proceed as if you had a single-family home. Your condo is approved for a VA loan with no additional steps or requirements.
Your condo complex has been approved, but the VA has concerns of at least one aspect of the application. An example may be that the owner occupancy rate is close to 50%. This doesn’t halt your VA loan journey – you just may need to fill out additional paperwork stating you understand there are conditions.
Previously, the VA accepted any condo project that was FHA-approved by the Department of Housing and Urban Development (HUD). This is no longer the case, but older complexes that earned HUD approval prior to December 2009 may still qualify for a VA loan.
Condo units in developments that are “unaccepted” are not eligible for VA financing. The VA has denied these most likely or they haven’t been through the VA approval process. In this case, you should look at approved condo developments or other VA-eligible properties.
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The VA also 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 that prevent foreclosure or resale of 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 property's future marketability.
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.
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.
VA loans allow Veterans to have a co-borrower or co-signer on the loan. Here we break down co-borrower requirements and provide common scenarios around co-borrowing and joint VA loans.
Compared to Veterans, civilians feel less financially stable, less optimistic about their finances and less capable of securing a home loan, according to Veterans United Home Loans’ most recent Veteran Homebuyer Report, a quarterly national survey of Veterans, service members and civilians who intend to buy homes in the next three years.