Can You Get a VA loan For a Condo?
May 11, 2022
It’s common for veterans or troops in America to use their VA loan benefits to get a house. However, condos can be just as comfortable as houses and they come without the extra repairs and maintenance fees. So, can a VA loan be used for a condo? The answer is yes, but certain requirements must be met in order for the purchase to be approved by the Department of Veterans Affairs. In this blog post, we go through how to use a VA loan to get a condo and the things that you should consider beforehand.
Why Buy a Condo?
A condominium is a solitary unit within a multi-unit structure, similar to an apartment except that condominiums are owned rather than rented. Condos can be great for people in the military. For one, the owner of a condo has access to many amenities like swimming pools, gyms, and parks without having to pay for their upkeep. This can be a beneficial perk for service members who are deployed often and don’t have the time to take care of a house and yard. In case you have to move again, you don’t have to worry about abandoning any amenities that you’ve invested your time and money in.
Another selling point is that condos are usually cheaper than houses. Condos have less space to work with and they share common walls with other units. This can be inconvenient for parents with children or a godsend for service members who are looking to live a simple life while still owning property.
There are many reasons to own a condo as a current or previous service member but if you’re looking to buy a condo with a VA loan, you’ll need to find a VA-approved condo to buy from.
VA-Approved Condo Units
VA loans can be used for condos, but only on condominiums that are approved by the Department of Veterans Affairs. The HOA in charge of the condo had to have applied and received approval from the VA to be on the accepted condo units list. You can request a check for approval on the VA website.
However, the VA puts a lot of responsibility on the lenders to ensure that the VA requirements are met by the condo in question. There are many requirements that the condo unit has to meet but here are a few of the main ones:
- The condo needs to have more than one unit.
- A single entity (business or person) can’t own more than 10% of the condo units.
- At least half of the units in the condo need to be owned and used by owners.
- 75%+ of new construction condo developments must be sold.
- 85%+ of the residents need to be up-to-date on HOA fees.
The Process of Getting a Condo Approved By The VA
If your dream condo isn’t on the list of VA-approved condos, then there are steps you can take to get that condo approved. The approval process can either be started by either an HOA or mortgage lender. You can go to the HOA and ask them to request approval through a lender which requires a lot of paperwork and there is even a fee.
The other option is to go directly to the mortgage lender to see if they have experience getting a condo approved. The lender may be able to speed up the approval process by a good amount and they should be familiar with the necessary paperwork.
Common Reasons a Condominium Community May Get Denied
The VA typically looks at the condo unit and the HOA that manages the building when they are determining whether or not to approve a unit. If either the condo unit or the HOA doesn’t meet their requirements, then the condo unit will likely get denied. Some common reasons why a condo unit may get denied are:
- The HOA has the “Right of First Refusal” bylaw that allows the HOA to purchase a unit before the owner can sell it to another buyer.
- The condo unit is involved in litigation.
- The HOA prevents resale or foreclosure without their approval.
Real Estate Agents Make The Process of Finding an Approved Condo Easier
From finding VA-approved condos to helping you navigate the process of getting a VA loan for a condo, real estate agents are an irreplaceable resource for service members who are looking for a home. They can easily differentiate between approved and unapproved condos and they can inform you on which type of mortgage loan is best to get for the condo of interest.
If you need more tips on what to look for when buying a condo, check out this blog post.
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Not all real estate agents are created equal. Finding a great real estate agent to work with can be very difficult. Luckily, there is a new type of real estate agent organization that streamlines your search for a high-quality real estate agent. This group of agents is called the Negotiators.
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Contact your local Negotiator if you want to work with a great real estate agent.