VA Home Loans

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If you’re thinking about accepting a purchase offer from a Veteran or Active Duty Service member wishing to use their VA eligibility to purchase your home you’d do well to consider some of these facts about your home to ensure a successful closing.

It’s important for both you and the home buyer to know that an appraisal can make or break a real estate transaction regardless of the type of financing your home buyers is using.

For those sellers who are agreeable accepting VA financing as a purchase contingency, it’s certainly in your best interest to be familiar with VA appraisal guidelines. All properties financed through a VA loan must undergo a VA appraisal and meet VA Minimum Property Requirements (MPRs). Some MPRs are very precise while others give appraisers room for interpretation.

Here’s a summary of some major MPRs for any home seller to consider:

  1. Your property must be for residential use. Office buildings or storefronts can’t be financed through VA loans. If any part of the property is designed for nonresidential purposes (for example, a home hair salon), that portion must not exceed 25 percent of the total floor area.
  2. Your must have space necessary to assure suitable living, sleeping, cooking and sanitary facilities. Make sure the home has an adequate kitchen, bathroom and sleeping area.
  3. Mechanical systems must be safe and have reasonable future utility. Electrical and plumbing systems must be in good repair and have some usable life remaining. Minor electrical glitches are no major problem, but an entire house with old knob and tube wiring will have trouble meeting VA regulations. If you think your property might not meet this standard talk with your listing agent and discuss marketing your home with FHA 203K financing.
  4. Heating must be adequate. The home’s heating system must be safe and adequate. Any unvented space heaters must be inspected by a heating contractor, equipped with an oxygen sensor and meet all building codes or manufacturer’s recommendations. Homes that use wood-burning stoves as a primary heating source must also have a conventional heating system that maintains a temperature of at least 50 degrees Fahrenheit.
  5. Property must have domestic hot water, continuing supply of safe drinking water and safe method of sewage disposal. Water quality must meet local standards (usually set by the health department), and sewage systems must adequately dispose of waste.
  6. Roofing must be adequate and provide reasonable future utility. The roof condition will be closely examined by the VA appraiser. A defective roof with three or more layers of shingles must be replaced and all old shingles must first be removed.
  7. Crawl space must have adequate access, be clear of all debris and be properly vented. Any excessive dampness or pooling of water in the crawl space must be corrected. Leaky basements can be a deal breaker for many VA house hunters. Foundation problems are common among older homes and can be expensive to correct. If your home if showing any issue that might indicate a foundation problem and you can afford to repair it consider marketing your property as FHA 203K eligible.
  8. Utility services must be independent for each living unit unless there are separate shut-offs for each unit. This isn’t typically a problem for most properties.
  9. Properties must have safe access from the street. Properties must have private driveways or permanent easements to allow access. If you home is on a privately maintained road you’ll need to have a recorded private road maintenance agreement that adequately addresses the road maintenance signed by all parties who have an interest in the land the easement covers.
  10. Properties must be free of any hazards which adversely affect health and safety of the occupants. This is a rather vague statement by the VA. The VA does not include specific criteria that must be met under this category, so “hazards” can be left to the interpretation of the appraiser.
  11. No defective conditions which impair the safety, sanitation or structural soundness of the dwelling. Appraisers are advised to watch for defective construction, poor workmanship, and evidence of continuing settlement, excessive dampness, leakage and decay.
  12. Lot must be graded so that it prevents pooling of water on the site and drains water away from the home. Poor drainage can lead to expensive exterior and foundation problems, so your home needs to be properly elevated.
  13. No wood-destroying insects, fungus growth or dry rot. A termite inspection may be required in your area. Properties with termite infestations must be treated and re-evaluated to garner VA approval.
  14. Lead-based paint must be evaluated and corrected. Properties built before 1978 must be inspected for lead-based paint. Surfaces with cracked or chipped lead-based paint must be scraped and repainted, covered with drywall, or totally removed.

The best way know if your home meets VA minimum home property standards is to ask your listing real estate agent. If you’re concerned about any of the issues mentioned discuss it with them when signing a listing agreement. Doing so lets them know it could be a concern and gives them time to do any necessary research well before accepting a purchase agreement and resolve any concerns that could prevent you from having a successful closing.

For a complete list of VA appraisal criteria, see VA Pamphlet 26-7, Chapter 12..

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A SIMPLE HOME SHOPPING INSPECTION TOOL

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