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What can I buy with a VA loan?

Mar. 4, 2014 - 11:59AM   |  
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If you’re ready to buy a home and finance it using your VA Home Loan Benefit, congratulations, you’ve now got the best home loan in the market for those wanting to put little to nothing down. It’s a rather exciting process whether you’re buying your first or even your third home, it’s fun when you know you’re preapproved and all you need to do is find a property. When you get your certificate of eligibility, you’ll see how much entitlement you have as well as what the VA home loan guarantee is good for. What types or properties can you buy and finance it with a VA mortgage?

Single Family Home. The most common of property types, this is the typical home. A home on a lot that is detached from other properties. In appraisal parlance, it’s described as “single-family, detached.” The home and the lot must be financed together, called an improved lot and the borrower owns both the structure and the land upon which the structure sits. All purchases using the VA home loan program must be used for a primary residence and not used to buy rental or investment properties. Conventional loans allow for investment property loans, but not VA.

Condominium. A condominium is a legal definition of a home where the veteran owns the area within the walls of the unit but shares equally with other property owners the common areas of the project. Common areas include things such as sidewalks, swimming pools, landscaping and community buildings.

A condominium project must be approved by the VA before the loan can be approved for the veteran. The VA has a specific set of requirements in order for a condominium building can be approved. The condominium management will be provided with a condominium approval checklist showing evidence of sufficient insurance coverage on the property, that there more owner occupants than there are renters and there are no existing legal issues among other requirements.

Much like the VA loan approval process, the VA lender can certify that the project meets the VA requirements by reviewing the condominium approval form.

Townhome. A townhome is a bit of a cross between a single family, detached structure and a condominium as the owner of a townhome owns the structure and the land as well as the roof, more property ownership compared to a condominium. And like a condominium, there are common areas that are equally owned by the residents.

Manufactured Home. A manufactured home, sometimes referred to as a mobile home, is also eligible for a VA loan as long as the manufactured home meets VA standards and is financed with the lot upon which it sits. Much like a condominium or townhome, the manufactured home must meet minimum VA requirements including but not limited to being permanently affixed to the foundation, conform to VA’s minimum property requirements (MPRs) and conforms to all local building and zoning laws. The manufactured home is built completely at the factory then transported once finished. It’s important to note that many VA lenders do not issue VA loans for manufactured housing so make sure you’re a lender approves such properties beforehand.

Modular Homes. A modular home is a structure where different components are manufactured at the facility yet built upon the lot where it will ultimately rest. A manufactured home is built at the factory but a modular home is completed at the construction site.

2-4 Unit. Finally, VA loans may be used to finance a duplex or 2-4 unit property only as long as the veteran occupies one of the units. For instance, a veteran can buy a duplex, live in one side and rent out the other.

It’s important to note that just because the VA allows financing for a specific type of property doesn’t mean the VA lender is required to approve one. If the property is a modular or manufactured home, check in advance if the lender will accept the property.

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