Types of Property for VA Home Loans
Buying a home is a big milestone, especially if your time in the military involved frequent cross-country or international moves. Veterans can find support from the VA, but understanding loan requirements and eligible types of property for VA home loans can be difficult.
Veterans Guide can help you navigate the VA-backed loan process. Our team of veterans and allies is dedicated to helping veterans achieve their dreams of homeownership and access the benefits they’ve earned.
Overview of the VA Home Loan Program
The VA’s home loan program assists veterans with buying, building, or improving a home or refinancing a current home loan. VA home loans are issued by private lenders such as banks, mortgage companies, and credit unions, with the VA guaranteeing a portion of the loan amount. You must meet the private lender’s loan guidelines and have sufficient credit. Certain properties, such as manufactured homes, may have more requirements.
The partial loan guarantee from the VA means that private lenders are more likely to give you better terms, like lower interest rates, reduced closing costs, and no private mortgage insurance requirement. In most cases, you won’t even need a down payment to purchase a home with a VA loan.
VA loans are available to service members and veterans. Current service members must have 90 days of continuous service, while veterans generally must have 90 days of wartime service or 181 days of peacetime service. National Guard members and Reservists usually qualify after six years. Exceptions apply for service-related disabilities and qualifying discharges.
The VA caps the amount it guarantees lenders. If you have full entitlement, the VA will guarantee 25% of any amount over $144,000.
If you currently have a VA loan or have had a VA loan foreclosed on, you may only have partial entitlement. The amount of your entitlement and your VA loan limit depend in part upon where you live.
VA-Approved Property Types
To get a VA-backed loan, your property must be for your use as a primary residence. Other requirements apply depending on the property type.
Single-Family Homes
Most VA-backed loans are used to purchase single-family homes. You must use your home as your primary residence, and the property must meet minimum requirements.
The lender issuing your loan may have additional credit requirements,
Multifamily Homes
VA-backed loans can be used to purchase multifamily homes of up to four units. You must occupy one of the units as your primary residence and meet minimum property requirements.
Purchasing a multifamily home can be a great way to generate rental income or defray your mortgage costs.
Condominiums
A condo must be on the VA-approved condominium list to be eligible for a VA-backed loan. The VA provides a convenient search tool for service members to use.
If the unit you want to buy isn’t on the list of VA-approved condos, your lender can request approval. This process takes time, so it’s important to work with a lender familiar with the VA process.
Townhomes
Townhomes are typically eligible for VA-backed loans and treated as single-family homes if they’re individually owned.
Manufactured and Modular Homes
Manufactured and modular homes are eligible for VA loans, but VA appraisals and lender overlays, which are additional qualification requirements, hold them to stricter standards.
A VA loan for manufactured homes, or homes fully assembled at the factory, requires that the home be affixed to a permanent foundation. Modular homes, which are built in separate parts and assembled at the job site, also need a permanent foundation.
New Construction Homes
You can use a VA-backed loan on a new construction property. However, in practice, you may find financing limited. You must work with a VA-approved builder and may want to get loan preapproval from your VA-approved lender.
VA Loans for Existing Homes Versus New Builds
Using a VA loan to purchase an existing home can be faster and easier than going with new construction. Building your home may run past schedule and over budget, so you must plan for contingencies and work closely with your VA-approved builder.
However, new construction offers more customization opportunities, especially if your disability status affords you a housing allowance. Buying an existing home means you may settle for one that doesn’t completely meet your needs. There could also be surprises at the inspection and appraisal that hold up your loan.
Properties Not Eligible for VA Loans
The following types of property are not eligible for a VA loan:
- Vacation homes and timeshares
- Investment properties, commercial real estate, and working farms with income-producing structures
- Co-ops
- Properties not meeting VA minimum standards
- Raw land, unless it’s part of a VA construction loan
VA Minimum Property Requirements
All houses or housing units must meet VA minimum requirements to qualify for a VA-backed loan. These standards help ensure each home is “safe, structurally sound, and sanitary.”
Your property must meet the following requirements:
- Have electricity, running water, a safe method of sewage disposal, and in most places, heating
- Have a roof of “reasonable utility”
- Be move-in ready
- Be termite-free
- Be without construction defects and poor workmanship
- Have a settled foundation and be free of basement leaks
Your VA inspector will recommend repairs if the property does not meet these standards.
Tips for Choosing the Right VA-Eligible Property
VA loan real estate guidelines are tricky, but working with professionals familiar with the VA can help you find the right property. Real estate agents can help you find properties that already meet VA standards, including approved condos. Knowledgeable lenders can help you with considerations like underwriting standards on manufactured homes.
Consider asking your lender for preapproval to learn what you’re eligible for. Help is available if you’re trying to get a VA loan with bad credit.
VA-backed loans aren’t the only benefit available to veterans. A VA lawyer can help you calculate your disability rating and apply for a rating increase. They can also assist you with your benefit schedule or obtaining back pay.
FAQs About VA Home Loan Property Types
We’re here to answer your questions about VA benefits. Check out our video resources, as well.
Can I Use a VA Loan To Buy Land and Build a Home?
Yes, but you must plan to use the land to build your permanent residence. You must work with a VA-registered builder and construct the home according to minimum property requirements.
Are Fixer-Uppers Allowed With a VA Loan?
You can use a VA rehab loan to borrow the money to purchase and repair a fixer-upper. However, you must meet certain standards and put the repair money towards improving the safety or functionality of your home.
Can I Use a VA Loan for a Rental Property?
You may not use a VA loan for an exclusive rental property, but you may purchase a multifamily home provided you live in one of the units.
What Are the VA’s Property Condition Requirements?
The VA’s property condition requirements, or minimum required standards, protect the safety, sanitation, and proper construction of properties approved for VA-backed loans.
Can I Buy a Duplex or Triplex With a VA Loan?
Yes, as long as you occupy one of the units.
Talk to a VA Loan Specialist Today
VA-backed loans allow veterans increased opportunities for home loans. You can repair your current home, buy a new home, or even bring in rental income with a multifamily home. Help is available to help you determine eligible types of property for VA home loans.
At Veterans Guide, we can provide you with a free consultation and personalized guidance that can turn home ownership from a dream into a reality. We can advise you on multiple types of property and complicated credit situations.
Contact us today. We will connect you with our trusted partner, Novus Home Mortgage, who can help answer your questions.
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