What Home Types Can Be Purchased With a VA Loan?
Once you find out about the VA’s special loan program for purchasing homes, often the next question that comes to mind is how limited you are when choosing the home you would like to purchase. While there are some limitations in place, for the most part, any house that you’d want to live in will be eligible for a VA loan. In this article, we’re going to talk about the eligible home types and the considerations that go with each type. We’re going to talk about existing homes, new homes, condos, and manufactured homes. Each situation is slightly different, so we’ll try to give you a good idea of what to expect in each situation.
Houses – Proposed, New, and Existing
Houses fall into three main categories, all based on the status of their construction: proposed construction (or under construction), new construction, and existing construction. A proposed or under construction is a property which is not completed when the loan is made. A new construction is a home that is completed when the loan is made but has not had its first occupant yet. An existing construction is a home that has had at least one occupant previous to the person getting the loan to buy it. A proposed/under construction home is eligible as long as it has been inspected appropriately by either the VA or HUD during construction. A new construction is covered if it is either covered by a one-year VA builder’s warranty, enrolled in a HUD-accepted ten-year insured protection plan, or built by a veteran, as the general contractor, for his/her own occupancy. An existing property is eligible for a VA loan as long as it meets the VA’s Minimum Property Requirements, which all properties must also meet.
Condos and Other Community Developments
Condos are not as straightforward as houses. Each condo project needs to first be approved by the VA before any condos within the project can be eligible for a VA loan. Why? Because condos vary a lot in what the owner of a condo must agree to in order to purchase the condo. Many projects put limitations on the owner’s ability to sell the condo or other title limitations, and this presents a concern with one of the VA’s Minimum Property Requirements, which is that there are no restrictions on the title beyond the basic ones needed to obtain a home loan. A condo project may already be on the approved list, or you may need to submit the condo project’s documents to the VA for them to approve them. If the project is not approved, then no condos within that project will be eligible for a VA loan. The same is true with HOAs and other Planned-Unit Developments though those do not need to be approved beforehand; title and restriction issues will be discovered during the appraisal process.
Manufactured homes are a bit tricky. The VA distinguishes between manufactured homes, modular homes, and mobile homes. The type of manufactured home that is fully eligible for a VA loan term of 30 years must be classified and taxed as real property, properly affixed to a permanent foundation, substantially conform with the VA MPRs, and conform with applicable building code and zoning requirements for real estate. Modular homes, which are delivered to the building site in sections, but are not affixed to a chassis with wheels, are also eligible as long as they are constructed to the standards of the State in which the factory is located. For the most part, mobile homes, or manufactured homes on wheels, are not eligible for a VA loan, nor are houseboats. If you really have your heart set on getting a mobile home or a houseboat, you can look at Title 38 CFR 36.4200 to find out what your options are.
Summary & Conclusion
As you can see, any of the above home types, though, may not be eligible if they don’t meet the VA’s Minimum Property Requirements, which are not onerous or difficult to meet – they are considered a minimum standard of quality that a property must meet if it is to be expected to adequately meet the needs of the veteran-occupant.