If you have served our country in the military, it is likely that you qualify for special help buying a home. However, in some cases you might be more interested in a VA approved condo than in a standalone house. Condos offer a number of amenities that can be attractive, from a community setting to HOAs that take care of maintenance and yard work.
VA loans come with benefits like $0 down and lower monthly payments. Your mortgage rate will vary based on a number of factors, but you can usually secure terms that fit your needs and financial situation. However, it is often easier to receive approval for a more traditional home than it is to get a VA loan for a condo. Even so, it is possible to get a VA approved condo. If you are set on a condo and want to take advantage of the special loan program offered to veterans, here is what you need to know:
Qualifications for a VA Approved Condo
Condos have received a bad rap in recent years, and that can impact your ability to use your VA loan to purchase in a condominium development. In order to make the list of approved condos, a complex must have at least 50% of the building units designated as owner-occupied. Many condominium communities have owners who rent out the units. In some cases, this can result in damage and affect the value of other units in the community. Because VA loans are made by lenders but backed by the government, some of the risk of lost value is mitigated when more units in the community are occupied by owners, rather than tenants.
In newly constructed communities, the VA wants to see 75% of the units sold prior to approving for loans. Additionally, no more than 15% of the owners in a community can be behind in their HOA fee payments. There might be other requirements as well, but if these basic qualifications are met, there is a good chance that you will find a VA approved condo in that community.
The Department of Veterans Affairs offers a research tool that allows you to search for approved condos in a specific area and receive a report. This can help you avoid wasting time looking at condos that don't make the approved list.
What if You Want a Condo not on the List?
Because an entire condo or townhome community must be on the VA's approved list before you can obtain financing for a single unit, your lender will need to research your choice. However, just because a community isn't on the approved list it doesn't mean you won't be able to buy at all. It's possible for you to request approval from the VA. Your lender will need to go through the paperwork, and submit the request. Before you ask to have a condominium community approved, understand that it can take time to complete the process. The VA will go through the documents related to the condo or townhome community and determine whether or not it meets the requirements for approval.
Even if you don't end up with a VA approved condo, you can still obtain financing. And though there are good terms with VA loans, you might not always get the best VA mortgage rate when you use the program. If you have excellent credit and a down payment, you might qualify for a loan through the FHA, or even qualify for a conventional loan. If your desired condo is located in a rural area, you might even be able to take advantage of a $0 down loan through a USDA program.
Shop around for the best deal for you, and don't assume that you need a VA loan to purchase the home you want.