Exploring VA Loan Property Requirements: What You Need to Know

Purchasing a home is an exciting milestone, but it also involves a lot of requirements and paperwork This is especially true for VA loans, which have specific property standards that must be met before the loan can be guaranteed by the Department of Veterans Affairs (VA) As a VA loan borrower, it’s important to understand these requirements so your home purchase goes as smoothly as possible.

In this article we’ll explore VA loan property requirements in detail looking at topics like

• The purpose of minimum property requirements (MPRs)
• Key standards for safety, security, and sanitation
• Special considerations for location, utilities, and environmental factors
• What appraisers look for during property inspections
• How defects and repairs are handled in the loan process
• Tips for choosing a property that aligns with VA guidelines

Understanding these requirements upfront will empower you to find and finance your perfect VA home. Let’s dive in!

Why the VA Has Minimum Property Requirements

The VA established MPRs to protect the interests of veterans, lenders, servicers, and the VA itself. These standards ensure that properties are structurally sound, safe, marketable, and sanitary before a VA loan can be guaranteed.

Essentially, the VA wants to minimize risk by preventing veterans from getting loans for properties that aren’t livable or could end up costing a fortune in repairs. MPRs give homebuyers, sellers, and the VA confidence about the quality of the property in question.

While appraisers will note any obvious repairs needed, it’s important to understand they are not performing comprehensive home inspections. Appraisers mainly verify that the property is worth the loan amount. MPRs fill in the gaps to guarantee the home is fundamentally sound.

Key Standards for Safety, Security, and Sanitation

The VA’s minimum property requirements aim to ensure every VA-financed home is safe, secure, and sanitary. Here are some key standards:

Safe

• No health/safety hazards like dilapidated structures, foundation issues, faulty wiring, crumbling chimneys, etc.
• Adequate foundations, roofing, siding, ventilation, insulation, stairs, and fireplaces
• Proper grading for drainage away from the structure
• Access to all utilities for maintenance and repair without trespassing
• Ability to exit home safely in case of fire (sufficient egress)

Secure

• Doors, windows, and other entry points free from broken panes, locks, etc.
• Proper barriers like fences around pools, retaining walls on steep slopes, etc.
• No easements or encroachments that pose security risks

Sanitary

• Connection to public water or an approved well/cistern water supply
• Adequate hot water capacity
• Connection to public sewer or an approved septic system
• Proper sanitary facilities like toilets, sinks, showers, etc.
• No lead-based paint hazards
• No mold, pest infestations, or other unsanitary conditions

These give a general overview of MPRs related to safety, security and sanitation. Keep reading for more specifics.

Location, Legal, and Environmental Considerations

In addition to the physical property itself, VA requirements consider factors related to the location, legal status, and environmental conditions of the property and surrounding area. Some key standards include:

• The property must be a single, readily marketable real estate entity. For acreage or multiple parcels, all land must be contiguous.
• Homes must meet all zoning laws and have any proper permits, easements, etc.
• Homes in designated flood zones must have flood insurance.
• Properties can’t be located in Coastal Barrier Resource System protected areas.
• Homes shouldn’t be subjected to regular flooding, lava flow hazards, mudslides, etc.
• Potential radiation and noise hazards near nuclear plants and airports must be mitigated.
• Homes must meet all local housing authority requirements.
• Environmental hazards like contaminated soil should be evaluated and remediated.

These requirements help ensure VA homes aren’t subjected to unnecessary environmental risks and are legally compliant for marketability and rebuilding if necessary.

The Appraisal Process and Minimum Property Requirements

When you apply for a VA home loan, the lender will order an appraisal to estimate the property’s market value and determine if it meets the VA’s minimum property requirements. Here’s an overview of what appraisers look for:

• ** structural integrity:** The home’s foundation, roof, siding, ventilation, insulation, stairs and other key structures are in good condition with no evidence of cracks, settling, moisture issues or other defects.

• functionality: The electrical, heating/cooling, plumbing and other mechanical systems and fixtures are in working order. Kitchen and bathrooms are laid out functionally.

• space requirements: Home provides sufficient living, sleeping, cooking, dining and sanitary spaces. Bedroom dimensions meet local codes.

• site conditions: Home is on a reasonably flat lot with proper drainage. The property is free of environmental hazards, easements, encroachments, etc.

• access: Home can be accessed directly via private road or public street. Shared access is permissible in some cases.

• disaster mitigation: Homes in flood zones have required flood insurance. Other natural disaster risks are reasonably mitigated.

• zoning/permit compliance: Home complies with or has proper variances from zoning laws. Permit records indicate additions/remodels were properly permitted.

The appraiser will recommend any repairs needed to bring the property in line with MPRs. Only minor cosmetic repairs should not be addressed. The underwriter will then decide if repairs can be completed after closing.

How Defects and Repairs Are Handled

For defects related to minimum property requirements, the appraisal will be contingent “subject to completion” of the necessary repairs by a licensed contractor. Any health/safety hazards must be fully repaired before closing.

Less severe defects like settling cracks or faulty fixtures can be remedied after closing in some cases if the purchase contract includes a repair escrow. The repair escrow money is held back from the seller by the lender until repairs are verified as complete.

Veterans can negotiate repairs with the seller and have a contractor lined up to fix issues right after closing. This helps minimize delays moving into the new home.

Tips for Choosing a VA-Compliant Property

Based on the VA’s minimum property requirements, here are some tips for choosing a home that will pass the VA appraisal with flying colors:

• Get a home inspection: Don’t rely solely on the appraisal. Hire your own home inspector to thoroughly evaluate the property condition.

• Evaluate key systems/appliances: Turn on faucets, flush toilets, run the garbage disposal, test AC, check hot water capacity, etc. to verify functionality.

• Assess site conditions: Are there potential drainage issues? Encumbrances? Environmental red flags? Drive the neighborhood and observe carefully.

• Confirm permits: Request permit records to verify the home improvements were properly permitted, especially major renovations.

• Assess natural hazard risks: Be aware of potential earthquake zones, flood zones, lava flows, tornado alleys, etc. that may require additional hazard insurance.

• Check zoning: Confirm with the local zoning office that the home complies with current zoning density, setbacks, and land use.

Following VA requirements will lead you to a quality home, while also helping your loan get smoothly approved. As you navigate the home buying process, keep these MPRs in mind to set yourself up for success.