VA Loans for Condos: A Complete Guide for 2023

Purchasing a condominium with a VA loan is an excellent option for many Veterans, but there are some special requirements to be aware of. In this comprehensive guide, we’ll cover everything you need to know about using your VA home loan benefit to buy a condo

Overview of VA Loans

First, let’s start with a quick refresher on VA loans. The Department of Veterans Affairs guarantees these loans, which are issued by private lenders. The main benefits of a VA loan are:

• Requires no down payment for most borrowers
• No monthly mortgage insurance
• Competitive interest rates
• Limited closing costs

To be eligible, you generally must have served at least 90 days of active duty during wartime or 181+ days during peacetime VA loans can also go to surviving spouses of Veterans

The Benefits of Buying a Condo

There are many advantages to purchasing a condominium, including:

• More affordable than single-family homes
• Low maintenance thanks to homeowners association
• Amenities like pools, gyms, and community spaces
• Often located in desirable areas near shopping and entertainment
• Security of living in a community
• Perfect for first-time homebuyers

Condos appeal to Veterans of all ages and stages of life. They provide convenience and a ready-made community.

VA Condo Approval Process

The main difference between buying a condo and a single-family home with a VA loan is that the condo complex must be VA approved. This extra step ensures the development meets the VA’s requirements.

To check for approval, your lender can search the VA condo database. If your desired condo is not listed as approved, here is the process to get it approved:

• The lender submits a request for approval to the VA
• The homeowners association provides necessary documentation including bylaws, budget, and meeting minutes
• The VA reviews the paperwork and conducts an appraisal
• VA gives approval (or requests more info from the HOA)
• Full approval can take several months

It’s crucial to know the approval timeline, so you can plan your purchase accordingly.

Requirements for VA Condo Approval

While the VA doesn’t publish its full approval criteria, here are some key requirements your condo must meet:

• Owner-occupancy – The VA wants at least 50% of the units to be owner-occupied, rather than rented out. This ensures a stable community.

• Delinquencies – No more than 15% of unit owners can be overdue on their HOA fees. This helps keep the HOA budget healthy.

• Investor ownership – A limit on how many units can be owned by one entity prevents a single investor from controlling the HOA.

• Pre-sales – For new constructions, at least 50% of the units must be under contract to buyers.

Your lender is your best resource for navigating the condo approval process. Be sure to communicate your intention to use a VA loan early in the process.

Types of VA Condo Approvals

The VA assigns one of three approval statuses to each project:

• Approved – Condo meets all requirements with no conditions. You can proceed as normal with your VA loan.

• Approved with Conditions – Condo meets minimum standards but the VA has concerns to monitor. Extra steps may be required.

• Unapproved – The project does not currently meet VA guidelines. Cannot get a VA loan here without going through full approval process.

Before making an offer, be sure to verify the status with your agent and lender.

Tips for Buying a VA-Approved Condo

If you’re ready to buy a condo with your VA home loan, here are some tips for a smooth process:

• Get pre-approved – Knowing your budget and loan amount makes for stronger offers.

• Review condo docs – Read through HOA rules and finances to avoid surprises.

• Ask about VA approval status – Don’t assume the condo meets VA requirements.

• Be ready to wait – Build extra time into your timeline for condo approval.

• Consider condo fees – Make sure the HOA dues fit into your monthly budget.

• Inspect carefully – Use the VA appraisal to understand the condo’s condition.

With proper preparation, buying a condo with your VA loan benefit can be an easy process. You’ve earned this perk, so take advantage!

Alternatives if Your Condo is Not Approved

What if you find a great condo that doesn’t meet VA requirements? You have three options:

1. Ask the lender to get it approved – The lender can submit condo docs and try to get VA approval. But know that it takes time.

2. Seek an exception – For a nearly-approved condo, the lender can request a one-time waiver. But these are very rare.

3. Use a different loan – You may have to forfeit the VA loan benefits and use a conventional loan for this purchase.

Ideally, work with your real estate agent to only select VA-approved condos to avoid this conundrum.

Pros and Cons of VA Condo Loans

Let’s round up the key pros and cons of using your VA loan benefit to purchase a condominium:

Pros

• Requires no down payment
• Won’t pay private mortgage insurance
• Competitive interest rates
• Only limited closing costs
• Buy with less cash upfront

Cons

• Condo must be VA approved
• Approval process adds time
• Some rigid VA requirements
• Monthly HOA fees
• Less control than single-family home

For most Veteran buyers, the huge perks of the VA loan outweigh the small hurdles of condo approval.

Final Thoughts

Owning a condo is a dream for many Veterans. Thanks to VA loans, buying a condo is affordable and achievable without breaking your budget. By understanding the approval process and requirements, Veterans can use their hard-earned benefits to buy the condo lifestyle they want.

The VA condo approval steps are simply in place to protect buyers. So while it adds some time and paperwork, in the long run it ensures you are buying into a stable, financially sound community. If buying a condo is your goal, be patient and persistent to make it happen with a VA loan.