Financing a Condo with a VA Home Loan

Financing a Condo with a VA Home Loan

Financing a Condo with a VA Home Loan

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 that 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.

4 Comments
  • David Miller
    Posted at 03:59h, 13 September Reply

    The part about the requirement for 50% owner occupied rates in a condo complex seems to contradict what I read elsewhere that says VA will disapprove complexes that have rental restrictions because they don’t want any potential restriction on a veteran being able to rent out their home in case of hardship or deployment. Other sites specifically mention to have bylaws modified to allow for an exemption to cap rules if one already exists. I know the 50% owner occupied rule exists for FHA but I was told it doesn’t exist for VA loans anymore.

  • Gelt Financial
    Posted at 03:25h, 09 July Reply

    Thankful for sharing this useful post!

  • Ryan
    Posted at 16:49h, 30 May Reply

    If I currently own a condo not on the approved condo list and have a traditional home loan (not VA), can I use a VA Home Improvement loan to refurbish the condo?

  • Roberta King
    Posted at 18:34h, 08 May Reply

    I really feel that the VA has let me down with trying to get a VA home loan for the condo I currently live in and have been here for three years. My HOA has the clause “first right of refusal” and I went through all the right channels to get that clause removed. I lost the change by 6 votes. I feel cheated by the HOA and the VA! I have my certificate of approval and my loan was already approved. I started with one loan company and the gentleman from VA said they are ok, but would advise me to go with Loan Depot. Well, they were a joke from the very beginning!! No help at all! I have done all the work to get my HOA to come to an agreement. Now I find out the lender is supposed to do that! The lender never sent all the paperwork to the VA! I did! I am very frustrated! I want to buy this condo with the VA loan. I plan to live here the rest of my life! Any advice would be greatly appreciated!

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