Once you determine your buyer may be eligible for VA Loan benefits, you’ll discuss and explore the type of property they want to buy. The Department of Veterans Affairs has established a few requirements on the types of properties that are eligible for VA Loan financing.
Requirement 1: Home must be a primary residence.
Vacation homes or strictly investment properties are not eligible for VA Loans. That doesn’t mean the buyer can’t convert the home into a rental property later. But when they purchase the home, they have to intend to live there for a reasonable amount of time after closing. In some cases, a spouse can meet the occupancy requirement. You’ll see this most frequently with active duty service members stationed overseas or those who are temporarily relocated.
Requirement 2: Home options vary and involve different steps to close.
Once you’ve confirmed they intend to occupy the home as a primary residence, there are a lot of different options. A buyer can purchase a single-family residence, condo, townhouse, duplex, 3-plex, 4-plex, manufactured homes and other types of properties.
NOTE ABOUT CONDOS
Condos have to be approved by the VA before closing. There is a list of approved condos on the VA’s website. If the condo isn’t already approved, work with the loan officer to get a list of the documents needed to submit a request for approval. If the buyer is interested in a condo that isn’t currently approved, be prepared to add additional time to the proposed closing date.
NOTE ABOUT MANUFACTURED HOMES
While the VA will offer a loan guarantee on manufactures homes, lenders will generally require the home to meet additional guidelines. Veterans United Home Loans offers financing on certain double-wide homes that are attached to a permanent foundation. It is important to talk with the loan officer regarding the full list of requirements before submitting an offer.
NOTE ABOUT OTHER PROPERTY TYPES
If the buyer is looking for a property outside of what is listed here, talk with the loan officer before making an offer to determine if the property is eligible for VA financing.
NOTE ABOUT UNIQUE PROPERTIES
A buyer will have a difficult time being approved for VA financing on unique properties. For example, a log cabin or Aframe may have multiple comps in your area, or there may be none. If there aren’t any, the appraiser will have a difficult time assessing value and the buyer may have to select a different property.