Purchasing a Condo with your VA Home Loan
Anyone who has ever served in the Armed Forces, National Guard, or Reserves, will more than likely qualify for a VA Home Loan. For some people, though, the benefits of owning a condo or townhouse outweigh their desire to own a traditional home. It may be possible for you to use your VA Home Mortgage to purchase the condo you’ve been wanting. The VA does have a list of approved condos eligible for their home loan program.
It’s true that it is typically easier to secure VA Loan financing for a conventional home, but you may be excited to take advantage of the benefits condominiums have, like yard work and home maintenance included with your HOAs. It is possible and you can still receive a no money down low interest rate loan (determined by varying factors) for your dream condo.
Here are the requirements to use your VA Home Loan for a townhouse or condominium
Often, because of high rental rates in condominium communities, these places get a bad reputation. The damage that can be done to a few units can affect the value of all the units around it. Because of this, the Department of Veteran Affairs requires communities on its approved list to have at least 50 percent of its units be occupied by their owners. Not rentals.
In addition to the 50 percent owner-occupancy requirement, the VA stipulates that a minimum of 75 percent of the community must be current on their HOA payments.
If a condominium or townhouse community has just been built, the VA insists that it will not approve a VA Home Loan until at least 75 percent of the units have been sold.
If you want a particular condo but it’s not on the approved list
There is a possibility you may get financing through a VA Home Mortgage for a condo even if it is not on the VA’s approved list. In this circumstance, your lender will need to submit all your paperwork directly to the Department of Veterans Affairs. The VA will then go through the paperwork and do its research to determine if the property meets the qualifications to be added to their list. It’s important to keep in mind, this process can take time as the VA must complete its due diligence.
If you are unable to purchase your condo or townhouse with a VA Home Loan
There are other possibilities out there for people unable to obtain a VA Loan for a condo. While the interest rates and terms of a VA Loan are great, there may be better options out there. If you can save up a down payment and if you have great credit, you could meet the requirements to obtain either an FHA Loan or a traditional loan. You could even look at applying for a loan through the USDA, if your condo is in a rural area, which can have a $0 down payment as well.
It’s important to remember that a VA Home Mortgage might not always be the best option for you when looking for a condo or townhouse. Look around and see where you can get the best deal.