VA loans are a compelling path to homeownership for military members, veterans and their surviving spouses many of whom may not have the funds for a down payment or have a limited credit history. However, not all homes qualify. Knowing what homes count as VA eligible properties will help you avoid holdups and make sure your ideal home meets VA loan guidelines.
In this guide, we break down what properties are eligible and what the VA’s condition requirements are for borrowed money, as well as what to watch for when house hunting.
What Is a VA Eligible Property?
A VA eligible property is a home that conforms to the Department of Veterans Affairs’ standards for either the borrower’s credit or property and also the lender’s underwriting requirements. These homes must be slated for the borrower’s own occupancy and meet the VA’s Minimum Property Requirements (MPRs), which assess the safety, livability, and structural soundness.
The VA does not restrict you in terms of what style of home you can buy from a single family home to a condo, as long as it meets the requirements there are several various choices. But what’s important is that the house must be move-in ready, or made so via VA-approved repairs or construction.
Types of VA Eligible Properties
Here are the broad classes of properties that might qualify:
1. Single-Family Homes
Single-family homes were purchased by most V.A. borrowers. These properties are usually the most straightforward to qualify for per the VA guidelines, particularly if they are in decent shape and ready to move in.
2. Multi-Unit Properties (Up to 4 Units)
You can use a VA loan to purchase a duplex, triplex, or fourplex if you occupy one of the units as your primary residence. Such a set-up could enable former service members to reside in one unit while renting out the others as extra cash.
Looking to generate rental income? Find Out: How to Use a VA Loan for a Rental Property.
3. Condominiums
Condos qualify if they’re on the VA-approved condo list. If you’re looking to buy a condo, ensure the building in question is approved for VA loans. This scenario is used so that the design is tested against occupancy, budget, and structural constraints.
4. Manufactured and Modular Homes
As long as a mobile home is permanently attached to a foundation and meets HUD standards, it’s eligible for a VA loan. Modulars homes are another option for homes, and they can be built even quicker, and often we find that they offer an array of more options as well.
5. New Construction Homes
A VA loan used to build a house on a piece of land is definitely possible. But the process must be done through VA-approved builders and the home must meet code and inspection requirements during construction.
If you want to build your dream home, consider your options with a VA Construction Loan.
What Makes a Property Ineligible?
Not all homes are eligible for VA financing. Here are some properties that tend not to be eligible for entitlement:
- Vacation homes or second homes
- Investment properties that the borrower will not occupy
- Raw land with no immediate plans to build
- Fixer-uppers that don’t meet VA MPRs and cannot be brought up to standard
A home that fails the VA Minimum Property Requirements can still be purchased and accepted for VA backing after repairs have been completed. Sometimes the seller will agree to make the necessary repairs or the buyer can ask the lender for approval to use a portion of escrowed money to fix things after they close.
Key VA Property Requirements
The VA describes the specific property standards to which homes must adhere to be considered safe to live in. Some highlights include:
- Safe Mechanical Systems: Heating, plumbing, and electrical systems must be operational and safe.
- Adequate Roofing: The roof should be in good shape with no leaks.
- Dry and Sound Structure: Foundations, walls, and floors must be free of major issues.
- Access and Utilities: Homes must have access to clean water, sanitary facilities, and public roads.
- Pest Inspection: Termite or wood-destroying insect inspections may be required depending on the location.
If you’re shopping for a home, it’s not a bad idea to familiarize yourself with the VA Minimum Property Requirements to avoid wasting time on a home that isn’t going to qualify.
What About Foreclosures or Short Sales?
You can use VA loans to buy foreclosures and short sales, if the property is in good condition (the property must meet VA guidelines) and move-in ready or is less than four months from completion. However, these homes come with long timelines and might even require a lot of repairs, so if you want to go this route, stick close to an experienced real estate agent and give those renovation lenders a holler.
Working With the Right Real Estate Agent
Not every real estate agent understands VA loans or properties that qualify. Find a Realtor who knows the VA loan process and can help you locate qualifying homes.
A VA-knowledgeable agent can save you time by screening out properties that are less likely to meet guidelines and by negotiating repairs if they are necessary.
Using a VA Loan to Buy a Home
When you’ve located a home that’s eligible for the VA loan program, the process looks similar to that of a typical mortgage, with a few VA-specific steps:
- Get Preapproved: This helps you know your budget and shows sellers you’re a serious buyer.
- Submit an Offer: Work with your agent to write a competitive offer.
- VA Appraisal and Underwriting: The VA appraisal confirms market value and checks the property against MPRs.
- Close and Move In: After approval, you’ll sign documents and get the keys to your new home.
To begin your home search, check available VA Loan Homes for Sale in your area.
Final Thoughts
A VA loan is an amazing benefit, but it only applies to homes that are in accord with VA standards. You may be interested in a resale l single family home or building a new one, or you may want to explore condos, but you want to be sure the property is VA eligible.
Knowing the VA’s rules on properties can help you shop smart and get through the buying process in one piece, which is why we want to take you through some of the VA’s property guidelines to help ensure you make the most of yours. With the proper lender, agent and information, you will be well on your way to maximizing your VA Loan.