The Department of Veterans Affairs offers a variety of benefits to borrowers who take out a home loan. One of those benefits is, there is no down payment required. In addition, there is no mortgage insurance required, and prices are low. 

There is one drawback to VA loans, though -- particularly for those purchasing in a major city: They cannot be used to buy cooperatively-owned apartments or homes, which are owned by a corporation for which a specific unit is reserved.

Indeed, this is a problem for veterans who plan to buy in big cities, especially in areas where co-ops make up a large share of housing. 

Before buying a co-op with a VA loan, you must keep the following in mind:

To buy the shares of a co-op, three distinct pieces of the process take place simultaneously. 

The very first thing is the issue of getting approved for the loan. A lender will be looking at income, the purpose of the property and its value. 

The second process includes the lender’s review of the co-op association to determine its stability. Co-op construction must be 100% complete to get a loan for your shares through Quicken Loans. 

The third process is unique to co-op transactions, as you have to apply for approval before the co-op board, which includes an interview and financial background checking. 

Choosing the refinance option for VA loans may not be your best choice if you are sure to move permanently due to the change of station.

What’s Being Done?

Members of Congress Carolyn Maloney (D-NY) and Eleanor Holmes Norton (D-DC) introduced the Fair Access to Co-ops for Veterans Act in early 2020. The bill also aims to extend the VA loan program to co-ops for veterans and military borrowers.

The new bill, officially introduced in February 2020, assures to make co-ops a permanent part of the VA loan program.

But, at present, the bill has made little movement in congress. It was also referred to the House Veterans Affairs Committee. As of now, there are no further updates.