VA loans can be used to purchase a condo, like a single-family home. Buyers should understand requirements and ensure the condo is on the VA-approved condo list.
The VA-approved condo units listing will be necessary for you and your lender to know about. This extensive database is where any Veteran Affairs (VA) approved condo developments will be listed. It is also the starting place to get new condos approved. It is not a showstopper if the condo is not on the list. If you as an active-duty service member or a veteran want to purchase with your VA loan benefit not being on the list, you can experience a delay in your purchase. Let’s travel down this blog to help you understand the VA loan process when wanting to purchase a condo!
Follow along to understand how to use a VA loan benefit for a condo purchase. Your condo may be your first step in a forever home or an investment in your future! A VA loan on a condo can provide you with several benefits, such as lower closing costs and interest rates, no down payment requirements, and the ability to finance up to 100% of your purchase. Additionally, VA loans have flexible qualification terms that may make them more accessible than conventional loans.
Why Condos can be Great for Military Personnel
Condos can be great for military personnel for several reasons. When considering purchasing a home, military personnel may have unique housing and financing needs. A condo complex is a multi-owner area where some homeowner obligations are often taken care of by a Homeowners Association (HOA). With a busy lifestyle, many choose to live in a multi-unit building also known as a condo community where they get to own one unit and will have to pay for some internal house maintenance but get to indulge in the luxury of giving up their outside building maintenance and yard duties! Some HOAs even offer water services, fitness studios, and pools, to name a few.
Can you Buy a Condo with a VA Loan?
Yes, you can buy a condo with a VA loan and your first VA loan has no loan limits! Talk to your lending team to understand how many items factor into that like, credit score, annual income, debts, etc. Active-duty services members, veterans and prior military members are eligible to use the VA home loan program to purchase condos in approved projects. This type of property must meet specific requirements set forth by the Department of Veterans Affairs (VA) to secure a condo loan under the VA loan program.
VA Loan on Condo Approval Process
When it comes to becoming a condo owner with a VA loan, there is an approval process that must be followed for the complex. The buyer’s lender has to ensure they are “on the list.” For a condo project or complex to be approved, it must meet specific criteria set forth by the Department of Veterans Affairs (VA). With multiple approval statuses’ your lender can assist you with the definition of each, some lenders will do all of the work for you and you may not even know what status your complex is to the VA. If you hear a status, let’s review some status options, and what they mean so you are prepared to choose your next step in purchasing.
- Accepted without conditions- complex is approved and meets all VA requirements; move to the next step in the VA loan process just as you would with a VA loan for a single-family dwelling.
- Accepted with conditions- have your lender find out what more information is needed because the complex may have a checklist item that causes the VA to send a warning sign to buyers. Examples include but are not limited to renter percentage vs. allowed may be hitting the HOA maxed allowed, ownership of the complex is moving to an unallowed percentage of one soul ownership, etc. In this case, please work with your lender to ensure proper paperwork is filled out for the VA to understand that the complex, even with the conditions, is still within their set rules to qualify.
- HUD accepted- Department of Housing and Urban Development projects prior to 2009 are acceptable complexes in most cases to the VA; next step, your lender will ensure that the complex still meets the requirements of the VA list. In this case, make sure to look at the HOA rules yourself and evaluate to ensure that your amenities promised will be delivered, as these complexes may qualify due to their timeline and previous criteria vs. the current VA list criteria.
What is a VA-Approved Condo?
A VA-approved condo is a condominium project or complex that has previously been approved by the Department of Veterans Affairs (VA). Many complexes set aside administrative resources to have their complex added to the VA list upfront to ensure that VA loan users are able to purchase condos with VA loans. These builders know the importance of military members being able to use this type of loan. This approval being completed prior to the buyer inquiring is why talking to some VA Loan users, you will hear, “we didn’t have to go through that process.” If this is the case, your lender may never even need to chat with you about the need to get the complex onto the VA-approved list. If the complex is new or needs to be established, a lender can assist with the next step. When a lender has to work with the buyer and real estate agent to contact the HOA for information is when buyers typically are alerted for the first time their future condo purchase needs to go through the process.
How do I Find a VA Approved Condo Complex?
To find a VA-approved condo complex, you or your lender can use the online resource located on the VA website to see the full listing. You can start your search by visiting the Department of Veterans Affairs website, where they list all projects and complexes that have been approved for VA financing. Additionally, you can contact lenders who specialize in VA loans as they often have access to and understand the ins and outs of searching for a complex on the list. Don’t skip this step! You need to know if your complex is approved or has been denied or the process for you and your lending team to get it approved!
What if your Condo is Not on the “List”?
Not on the VA-approved list for condo complexes? It may still be possible to secure financing through a VA loan. Using your own detective skills or, better yet, finding a real estate agent who can form or has a great relationship with the condo’s HOA is key! You will need to collect a few items to assist your lender in hopes of getting your dream condo onto the list! Contact your lender and have them provide you with a list of documents to prove that your condo meets the criteria set by the VA. Once you, your realtor, or the lender have collected the documents, they can submit a request to the Department of Veterans Affairs. It is important in this case to shop not only for a great interest rate but also for a lender who knows about the process and is willing to put in the sweat equity because the process of getting a condo onto the approved VA list can be a back and forth game with the VA and the HOAs. Requirements must be met, and the complex must be added to the list to get to closing.
VA Condo Requirements
When considering a condo for VA loan financing, it is important to understand the requirements set by the Department of Veterans Affairs. In order for a condo project or complex to be approved, it must meet certain criteria. Some lenders will have more criteria, but this is a baseline for the VA. The VA loan criteria include items such as levels of occupancy, is the unit rentable when you move, percentage of ownership has limits, and many more items that HOAs can assist in providing. The HOA is typically the starting point for collecting information. You can sometimes check with the HOA to see if they or an outside party has ever tried to get that complex onto the list, and that will be an indicator of previous situations where they were not approved or had limited approval.
VA Condo Approval Timelines
VA condo approval timelines include getting the condo onto the list (in some cases, just verifying it is already on the list), providing your lender with requested documents, and creating a closing timeline. Depending on the current status of the complex being on or not being on the VA-approved condo list, you will experience individual, situational timelines.
If the condo is verified to be on the list by a qualified lender to execute a VA-backed loan, you should see a closing within the standard 30-45 days. Suppose your qualified lender discovers that the complex is not on the list. In that case, they will need to take steps to work with you, your realtor, and the HOA to collect documentation to ensure that the complex is approved or denied by the VA before closing. Ask both your lender and realtor what their bandwidth is to work with you on this process, as some have more time to devote than others.
It is important to note that this approval process may take some time, and buyers should anticipate that they may need to wait before they are able to secure a loan. Additionally, some projects or complexes may not be approved by the VA, and buyers should consider this when looking for a condo. If the complex has been denied in the past, you should know this upfront, as it may not be an option to use your VA loan for this complex. If you need to move in quickly, be mindful that if the complex still needs to be approved, there may be a waiting period to seek approval from the VA. Your loan officer should be able to tell you the current wait times. Fun fact, typically, your lender will lock in your rate at a cost to you for a certain amount of time. Make sure you talk to your lender about these options upfront to ensure your locked-in rate covers the duration of your journey to seek approval for your complex!
In short, once a condo project or complex meets the criteria set forth by the VA, it can then be submitted for approval. The approval process typically takes anywhere from two to four weeks but sometimes can take longer. It is important to note that this timeline may vary depending on the complexity of your personal financial situation and other factors involved. Now get out there and shop for a condo with confidence; you know the questions to ask to make sure you are able to execute your VA loan benefits!
ADPI Pro Tips
You made it to the end, so here are your money-saving tips:
- Ensure the condo complex has been placed on the VA-approval list BEFORE submitting your appraisal request to avoid an unnecessary appraisal fee. These fees are typically a cost of the buyer but will not be useful if you cannot get it to close due to lack of VA approval. Also, check to see if there is a master appraisal that is within your timeline that can be used.
- According to VA mandates termite inspections are not required for units in high-rise condos (vertically stacked units). For side-by-side located in a “very heavy” or “moderate to heavy” zone, termite inspections are required unless the homeowners association can provide you with evidence of treatment being completed.
