Buying a condo with a VA loan isn’t much different than buying a single-family home. You have to have entitlement and qualify for the loan. One major difference, however, is that the condominium must be VA approved. This isn’t the case for single-family homes.
Let’s look at what this means and how you find out.
What Does a VA Approved Condo Mean?
Before you can buy a condo with VA financing, the development must be approved by the VA. In other words, it must meet the specific requirements they set. Following are the basic requirements:
- At least 50% of the units must be owned by the owners, not investors and rented out
- At least 85% of the homeowners must be on time with their homeowner’s association dues
- If the development is new, at least 75% of it must be sold
This is just the basics, though. The VA will evaluate any condominiums organization documents to ensure that there aren’t any restrictions in place. The most common include:
- The HOA restricting foreclosure on a unit unless the HOA approves it
- Age restrictions on who can buy the units
- Inadequate budget and reserves set for the HOA’s success
It’s best if you stick to condos that are already approved by the VA. The next step is learning how to figure this out.
How to Tell if a Condo is VA Approved
In order to determine if a condo is VA approved or not requires a visit to the VA’s website.
From there, if you know the name of the condo association, you are in luck. Just enter the name and you’ll have your answer within seconds.
If you don’t know the name of the association or you are looking for only approved developments, you can enter the city and state and get a complete listing. The results will turn up a listing of every association in the city/state you requested. You then have to click on each development to see if they are approved.
The Types of VA Condo Approval
As you navigate the listing of approved and non-approved developments, you’ll see a variety of different types of approval.
- Approved Without Conditions – This is the type of approval you want to see. You can secure VA financing on condos with this approval type without any issue. There is nothing you have to do or worry about as far as the VA’s approval on the unit itself.
- HUD Accepted – Technically, this means the development is approved. It means HUD approved it and borrowers could secure FHA financing. The VA used to just take whatever the FHA approved and approve it as well. That ‘grandfathering clause’ doesn’t exist any longer. However, most developments that are HUD approved end up VA approved too. You should ask your lender about it though.
- Unaccepted – Developments that do not meet the VA requirements will show up as unaccepted.
What happens if your association does not have an approval? You have two options. You can ask the HOA to request approval. However, this could take weeks or even months. If you don’t have that kind of time, you may have to choose a different property.
Finding out if a condo you want to purchase is VA approved is a crucial first step in the buying process. A condo that isn’t approved could turn into a logistical nightmare. The mortgage process on a condominium already approved by the VA, however, can be a rather smooth process.