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 VAs condo database online to see if the unit you want to purchase is in an approved development.
Purchasing a condo with a VA loan offers many advantages for military homebuyers. VA financing allows you to buy with no down payment and competitive interest rates. However, not all condos qualify for VA loans. The VA must approve the condo complex before you can use your VA benefits to buy there.
In this comprehensive guide we will cover everything you need to know about VA approved condos including
- How the VA condo approval process works
- Requirements for VA condo eligibility
- Steps to getting an unapproved condo complex VA approved
- Tips for finding VA approved condos
- Pros and cons of using a VA loan for a condo
Understanding these key aspects will help you successfully navigate buying a condo with your VA home loan benefit.
Overview of VA Condo Approval
The Department of Veterans Affairs maintains a list of approved condo complexes nationwide. You can use your VA home loan guarantee to finance a unit in one of these developments.
If the condo you want isn’t VA approved it’s possible to get it approved through a process handled by your lender. The VA reviews the condo’s organizational documents financials, and other information to determine if it meets their eligibility standards.
VA condo approval remains in effect unless the complex’s status changes down the road. So getting a condo VA approved opens up VA financing options for all future buyers as well.
Below we’ll explore the ins and outs of VA condo approval so you know what to expect when purchasing a condo using your VA benefits.
How Does the VA Condo Approval Process Work?
Here are the key steps involved when seeking VA approval for an unapproved condo complex
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Your lender submits a request to the VA. This includes organizational documents, financial statements, and other information about the condo development.
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The VA reviews the paperwork. They evaluate the condo based on their eligibility guidelines. This may take several weeks or even months.
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If approved, the condo gets added to the VA’s approved list. Approval remains in effect unless circumstances change. No need to repeat the process for future VA loan applicants.
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If the VA needs more information or identifies issues, they will notify your lender. There may be back and forth communication to address any concerns.
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Once approved, you can move forward with the VA loan. Your lender orders the appraisal and goes through the regular underwriting process.
Getting VA approval for a condo complex takes time, so keep this in mind when making offers. Always confirm the condo status before entering into a purchase contract if planning to use a VA loan.
What are the Requirements for VA Condo Approval?
The VA has not published their exact condo approval guidelines. However, these key factors often come into play:
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Owner-occupancy – The VA may require that a certain percentage of units, often 50-75%, are owner-occupied. High rental concentration can risk eligibility.
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Pre-sales – For new developments, the VA likely wants to see a certain percentage of units, such as 75%, under contract or sold.
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Concentration – The VA may limit the total number or percentage of units financed with VA loans.
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Financial stability – The condo must be financially sound with adequate reserves. High delinquency on HOA dues may also jeopardize approval.
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Special assessments – Large past or planned special assessments could impact VA approval.
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Litigation – Any pending or recent litigation involving the condo association may need to be resolved.
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Deed or resale restrictions – The condo must not impose rules prohibiting VA financing, foreclosures, short sales, or other deed/resale restrictions.
Your lender can provide further guidance on current VA condo requirements. Guidelines may vary over time as well.
How Do You Get an Unapproved Condo VA Approved?
If you want to purchase a condo that isn’t VA approved, follow these steps:
1. Confirm the condo meets basic eligibility criteria. Review the likely requirements so you don’t waste time on a complex that has no chance of approval.
2. Ask your lender to submit for VA approval. Give them organizational docs, financials, and other information about the condo development.
3. Wait for the VA review. This may take weeks or months. Be prepared for back and forth if the VA needs clarification or missing items.
4. If approved, move forward with the VA loan process. Get your Certificate of Eligibility, schedule the appraisal, and finish underwriting.
5. Add the condo to your permanent records. Keep a copy of the VA approval on file along with your loan paperwork.
With proper planning and patience, you can often get an unapproved condo qualified for VA financing.
How Can You Find VA Approved Condos?
Searching for condos already approved by the VA? Here are some tips:
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Check the VA condo approval list for all currently approved developments.
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Ask local real estate agents for help identifying approved complexes in your area.
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Search real estate sites for condos listed as “VA approved.”
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Look up recently sold condos financed with VA loans to find already approved communities.
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Drive around neighborhoods and look for “VA Approved” signage outside of condo buildings.
Taking the time to find condos already VA approved will make for an easier transaction.
Pros and Cons of Using a VA Loan for a Condo
VA loans offer significant perks for buying a condo, but also a few potential drawbacks:
Pros
- Requires no down payment
- Competitive interest rates
- Low closing costs
- No monthly mortgage insurance
- Safe financing option with VA backing
Cons
- Must be in a VA approved development
- VA condo approval process may cause delays
- Additional rules and requirements to navigate
- Potentially fewer condo options versus other loan types
For eligible borrowers, a VA loan can be an excellent option for condo financing. Just make sure you understand the VA condo guidelines and approval process.
The Bottom Line
Purchasing a condo with a VA loan offers military homebuyers a accessible path to homeownership. Following the proper steps to ensure your condo is VA approved will help your transaction go smoothly. If your ideal condo complex isn’t yet VA approved, take comfort knowing you can usually work to get it qualified.
With careful planning and patience, you can leverage your VA benefits to purchase a great condo. Just partner with a knowledgeable VA lender to make the financing process headache-free.
Legal and Occupancy Concerns for VA Condos
The VA also encourages lenders to include an attorneys opinion letter stating the condo development meets VA requirements.
The VA will want to ensure the condo development doesnt 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 communitys organization documents. Lenders want to ensure these communities are compliant with fair housing and lending laws and dont impact the propertys 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.
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Veterans United is recognized as the leading VA lender in the nation, unmatched in our specialization and expertise in VA loans. Our strict adherence to accuracy and the highest editorial standards guarantees our information is based on thoroughly vetted, unbiased research. Committed to excellence, we offer guidance to our nations Veterans, ensuring their homebuying experience is informed, seamless and secured with integrity.
VA Condo Approval Process
What happens if the condo you hope to purchase isnt in a VA-approved development? There are specific steps you can take to receive condo approval and it’s important to understand:
- VA condo approval can take several months
- Once the condo is approved, it is a lifetime approval
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 condos organizational documents.
These may 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
Its important to note that condo developments are under no obligation to provide this documentation.
The VA doesnt 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:
- Owner-occupancy: VA appraisers could flag a development if owner occupancy rates fall under 50% for the entire development.
- Vacancy rates: New developments might need a certain percentage of units sold or under contract. Generally, this is at least 75%.
- HOA dues: There might be a cap on what percentage of units can be behind on their HOA payments
Talk with a Veterans United VA Loan Expert for more details.
VA Approved Condos | What You Need To Know
FAQ
Is a condo approved for a VA loan?
How to know if a condo is VA approved?
How long does it take VA to approve a condo?
How do I find VA approved condos?
To find the official list of VA approved condos in a certain area, you must fill out the form on the VA’s site to request a customized condo report. A real estate agent familiar with the area you’re searching in can likely help you find VA approved condos more efficiently.
What does VA approval status mean for a condo development?
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.
Can you buy a condo with a VA loan?
When the condo is located within a VA-approved condo development, you can use a VA loan just like you would to buy a single-family home. The Department of Veterans Affairs helps veterans and active-duty service members buy their own homes. These homes can be condos but only within complexes that have earned the VA’s approval.
Does the VA finance condos?
The VA will only finance condos from its pre-approved list. Veterans can request a Customized Condo Report on properties they are interested in purchasing. At least 70% of the units in a condo community must be sold or under contract at the time of any VA borrower’s loan application.