Eligible active duty personnel, veterans, service members, and eligible surviving spouses may be qualified for a mortgage loan guaranteed by the U.S. Department of Veterans Affairs. VA loan amounts can be generous – up to 80 percent of the home's value. And because the government backs the loans, participating VA lenders do not require a down payment on the loan or costly mortgage insurance.
Just because the military applicant qualifies for a Certificate of Eligibility, it doesn't mean that the home the borrower wants to finance qualifies for a VA mortgage. Matching up the right home to qualify for a VA loan doesn't have to be a complicated process. Here are five tips for making the search as thorough and painless as possible:
1. Work with Knowledgeable Lenders
In The Home Buying Process For Veterans, the VA recommends that house shoppers use the services of a real estate agent who knows the VA Minimum Property Requirements (MPRs). There are also Realtors® that have earned a Military Relocation Professional designation who have the skinny on MPRs and how to recommend communities. Agents may have a list of move-in-ready, VA-compliant homes.
2. Shop for a Lender
In The Buying Process For Veterans guide, the VA also recommends to "contact several lenders to determine the best loan you can afford and be pre-approved." Don't be surprised if a VA-knowledgeable property agent requires you to have a preapproval. LendingTree's VA Loans Center can walk applicants through the process of shopping for VA-approved lenders and understanding what kind of home they can afford.
3. Learn the Property MPRs
According to the VA Compliance Inspector Guide, the property must have:
- Continuous, safe supply of water
- 75 percent living space, including a kitchen, living room, bedroom, and bathroom
- VA "safe" appraisal of gas power and heating systems
- A single residential space of no more than four units sharing laundry facilities
4. Learn the Roof and Structural MPRS
The VA requires properties under consideration for a federally-backed mortgage to be sanitary, safe and sound, with no evidence of:
- Poor drainage
- Broken windows
- Exposed wiring
- Dry rot/molds
- Leaking roofs
5. Avoid Shopping for Condos and Manufactured Homes (If Possible)
The VA maintains a searchable list of approved condominiums, and if the property is not on it, the applicant may be promptly denied – or at least significantly delayed in the loan approval. At the same time, there may be entire condominium complexes that have a nod from the VA.
Manufactured (or mobile) homes can also be approved by the VA, but borrowers may have to search for a lender willing to underwrite loans on them. They're more interested in lending on homes that gain value rather than depreciate.
Remember that it's best to find the most move-in-ready home within budgetary constraints. That's why borrowers should compare loans and work with knowledgeable agents. The VA will put any loan recommendation on distressed property on hold until the current owner brings the home up to safe and sound conditions – and that's only if the owners choose to make the repairs.