VA Lender’s Handbook Chapter 14 Summary
If you’re lucky enough to find a lender that is willing to finance a VA construction loan, or if you are using a cash-out refinance to make a major addition or improvement to your home, you will come face-to-face with the VA construction inspections, and it will be important for you to know how they work and what to expect. Chapter 14 in the VA Lender’s Handbook covers the construction inspections. We’ve written a series of articles on chapter 14, but we would like to provide this summary of the most important parts of Chapter 14 to give you a better idea if you want to take the time to go through all of the articles we’ve written on the full chapter.
Stages of Inspection
There are four stages of inspection that the VA requires every under-construction property to undergo, but the third and fourth usually happen at the same time, so in practice you’ll only need to worry about three inspections. Generally, you’ll have hired a contractor to take care of most of this, so you’ll mostly be a spectator, but Some of these apply more directly to VA construction loans, but most of it fully applies to additions to homes made with a cash-out refinance as well. The first stage is pretty basic. There must be an Equal Employment Opportunity Poster prominently displayed, potentially with a Spanish copy as well as an English copy. More importantly, depending on the nature of the work being done, either the excavation must be complete and ready for the footings and foundations, or the foundation walls are built and ready for backfill. In either case, the VA inspects it to make sure that the work is up to par and being done correctly.
The second inspection covers all the construction below the superstructure which was not inspected for any reason during the first inspection. The inspector will also examine the construction of the superstructure, “including quality of materials and workmanship, details of construction, and the suitability of arrangement of all items for subsequent installation of equipment and of interior and exterior finishing materials”. At this stage, the mechanical work should be mostly roughed-in, which should include the plumbing, heating, and electric installations. If you are building a modular home which has pieces that were assembled in a factory, you are exempt from the second inspection because the factory-assembled pieces must already be inspected to meet state standards.
The third inspection stage is essentially the final check to make sure that any and all onsite and offsite improvements or construction has been completed. Both the interior and the exterior will be subject to a thorough examination, with the VA checking the compaction of fill material, finish grading, drainage, utility connections, walks, drives, accessory buildings, retaining walls, planting, safety provisions at terraces, porches, and areaways, protection against the elements, masonry pointing, caulking at openings, paint coverage, flashing, design of dwelling structure, materials and details of their installation and finish, and other offsite improvements. The interior inspection includes evaluating the cabinets and millwork, materials, equipment, and details of their installation, interior surfaces, quality and operation of hardware, quality of tilework, glass, linoleum, venting of attics and underfloor spaces, and other things like fixtures.
The fourth inspection stage (which usually happens at the same time as the third), is very similar to an appraisal on an existing construction; pictures are taken, and the condition of the property is described, and a valuation is made. Other inspections may be made if there is something unusual or unique about the project, or if the builders being used have been the subject of frequent complaints.
Chapter 14 goes into more detail on the different stages and talks about re-inspections, missed inspections, and many other details related to the construction inspections on a VA construction loan or a major addition. If you are interested in further details on these things, you can read all of our articles on Chapter 14, which are written with the borrower in mind, or you can go directly to the VA Lender’s Handbook, which is available online, but written towards lenders. You can also call us or contact us via our website.