In the twilight years of their lives, some veterans opt to live in a condo and enjoy resort-like living without worries about security or outdoor maintenance to keep them awake at night. Thankfully, a VA loan can finance a condo. If you are planning to buy a condo unit using a VA loan, here’s a foremost consideration.
The condo search starts with VA
You found a condo that you like after deciding that the benefits of living in a condo outweigh the costs of staying in your apartment or maintaining a single-family home. But the question is, is the condo unit or its complex eligible for VA financing?
Indeed, more than you qualifying for the VA loan, you have to be sure that the building where your prospective unit is nestled meets the VA’s standards. Otherwise, it may not meet the VA’s property requirements.
Your first move is to check condos eligible in your state or community at VA’s dedicated portal. You can also run a detailed or summary report on a particular condo you’ve been eyeing to see if it matches the VA’s records.
What if your condo is not VA-approved?
A condo must be VA-approved first. Still, it’s possible to get VA financing for a condo that is not on the VA-approved list. That is, you through your real estate agent or the seller can ask the homeowners’ association (HOA) of the complex to seek VA approval.
The HOA is required to submit a number of legal and financial documentation for review by the VA’s Regional Loan Center. These documents include but are not limited to:
- Cover letter requesting VA approval. This details, among other things, the project address, the total number of units and how many units were sold, and if the development is new or existing and in what phase.
- HOA’s organizational documents such as articles of incorporation; by-laws; and declaration of covenants, conditions, and restrictions (CC&Rs).
- HOA’s latest financial statements and current budget showing reserves for maintenance, repair, etc.
- HOA’s board of directors’ statement on any pending or existing special assessments or litigation.
- State certification on the condominium.
New developments are required to submit additional documents such as phased development schedule, proofs that recreational facilities have been completed and common areas conveyed to the HOA free and clear of financial encumbrances.
There’s no guarantee that the VA will approve the application or the HOA will push through with its approval application. You can only wait for the VA’s approval of the complex to close your VA loan. But a VA financing on a condo purchase is always worth the wait because of:
- Zero down payment
- No private mortgage insurance
- Lower mortgage rates
- Lenient eligibility requirements, e.g. credit