VA Underwriting Guidelines 

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VA Property Eligibility

VA is very specific about what they will finance and what they will not.  Property eligibility guidelines are pretty strict. We hope this information is helpful in determining the eligibility of the home you are looking for.  There is a lot of detail so be sure to browse the entire page for situations that apply to your VA mortgage.

Acceptable properties

The property must be a single, readily marketable real estate entity.

  • Primary Residence - 1-4 units 
  • Manufactured Homes that are Classified and taxed as real property and properly affixed to a permanent foundation. 
  • Substantially conform with VA MPR's (Minimum Property Requirements), and 
  • Conform with applicable building code and zoning requirements for real estate. 

Note: Modular homes are eligible, provided they are covered by a HUD structural engineering bulletin, or constructed to the standards of the State in which the factory is located and receive that State’s approval certification. They are delivered to the building site in sections, but are not attached to a chassis supported by wheels. 

Condo/PUD (Condo's must be VA approved). 

Existing Construction:  A home which has either been previously owner-occupied or had all on-site and off-site improvements fully completed for one year or more is eligible.

New Construction:  Newly completed properties (completed less than one year and never owner-occupied) are eligible:

  • If either covered by a one-year VA builders warranty, 
  • Enrolled in a HUD-accepted ten-year insured protection plan, 
  • Or built by a veteran, as the general contractor, for his/her own occupancy. 

Note: An exception may be made for a veteran who wishes to purchase a new home from a builder who is not more than occasionally involved with VA financing and will not provide either a one-year VA builder's warranty or a ten-year insured protection plan.

Proposed or Under Construction:  Property is eligible for appraisal prior to construction or during construction, if the appraisal is based on proposed construction exhibits, and the property is inspected by VA or HUD during construction. 

Unacceptable Properties

  • Cooperatives 
  • Time-share projects 
  • Condos with leaseholds-- 
  • Condo-hotel 
  • Manufactured Housing in Ground Lease Communities 

Note: Refer to your Investor for additional restrictions.

For Additional Ineligible Conditions/Influences Refer to Properties Not Eligible for Appraisal

Condo Not Approved

A condominium must be acceptable to VA before any unit in the project can be eligible for VA loan guaranty. To avoid an unnecessary appraisal fee, a unit in a condominium should not be appraised unless there is a reasonable likelihood that VA or HUD will accept the project prior to loan closing. 

Ownership Not Fee Simple:  Property involving a less than fee simple ownership (for example , leaseholds, cooperatives, ground rental arrangements) is not eligible for appraisal without prior VA approval of the specific legal arrangement or project. 

Submissions to VA Central Office (262A) must include details of the ownership arrangement, copies of leases or other instruments creating the estate, and recommendations of the VA office of jurisdiction. 

Minimum Property Requirements (MRPs)

VA Minimum Property Requirements (MRPs) provide acceptability criteria for properties which will become security for VA-guaranteed loans. In proposed or under construction cases, the MPRs help ensure that the property is constructed according to the applicable building codes, Federal regulations, and HUD requirements. 

In existing and new construction cases, the MPRs provide a basis for determining that the property is safe, structurally sound and sanitary, and meets the standards considered acceptable in a permanent home in its locality. 

Existing Construction MPRs

Manufactured Homes Classified as Real Estate: When the foundation for manufactured home has been fully completed and the manufactured home unit has been installed, the home is considered to be "existing construction." There are two MPR-related requirements for these existing construction cases:

  • The site, manufactured home unit, and other on-site improvements must meet VA MPRs for existing construction. 
  • The manufactured home unit must be properly attached to a permanent foundation system which is constructed to withstand both supporting loads and wind-overturning loans, and is acceptable to the building authority having jurisdiction. 

Proposed Construction MPRs

Building Code Enforced:  If the property is located in a jurisdiction which enforces a State, county or local building code, then VA MPRs require that the construction comply with:

  • The applicable State, county or local building code. 
  • 24 Code of Federal Regulations (CFR) 200.926d, Construction Requirements. 
  • 1992 Council of American Building Officials (CABO) Model Energy Code (MEC), and 
  • HUD references below. 

Building Code Not Enforced:  If the property is located in a jurisdiction which does not enforce a State, county or local building code, then VA MPRs require that the construction comply with:

  • Applicable provisions of the current CABO International One and Two Family Dwelling Code, and any mandatory codes or standards incorporated by reference. 
  • 24 CFR 200.926d, Construction Requirements. 
  • 24 CFR 200.926e, Supplemental Information for Use with CABO One and Two Family Dwelling Code 
  • 1992 CABO Model Energy Code (MEC), and 
  • HUD references below. 

Manufactured Homes Classified As Real Estate:  When the foundation for a manufactured home has not been fully completed and the unit has not been installed, the home is considered to be "proposed or under construction." There are two MPR-related requirements for these proposed or under construction cases:

  • The site and on-site improvements (but not the manufactured unit itself) must meet the requirements outlined in "Proposed Construction MPRs". 
  • The manufactured home unit must be properly attached to a permanent foundation system which is constructed to withstand both supporting loads and wind-overturning loads, and is acceptable to the building authority having jurisdiction. 

Water Supply/Sewage Disposal Requirements

Shared Wells:  The following requirements must be met for a shared well:

  • The well must be capable of providing a continuing supply of safe and potable water to each property simultaneously, so that each dwelling will be assured a sufficient quantity for all domestic purposes. 
  • There must be a permanent easement which allows access for maintenance and repair. 
  • There must be a well-sharing agreement (recorded in local deed records)  which makes reasonable and fair provisions for maintenance and repair of the system and the sharing of those costs. 

Springs or Cisterns

Springs or cisterns are permitted where such facilities are customary and the only feasible means of water supply, provided they are installed in accordance with the recommendations of the local health authority, and the veteran purchaser acknowledges in writing his/her awareness of the situation. 

If the local health authority has no requirements, U.S. Public Health Service requirements apply. 

Sewage Disposal System

An individual sewage disposal system must adequately dispose of all domestic wastes in a manner which will not create a nuisance, or in any way endanger the public health.

Pit Privies

Individual pit privies are permitted where such facilities are customary and are the only feasible means of waste disposal, provided they are installed in accordance with the recommendations of the local health authority.  If the local health authority has no requirements, U.S. Public Health Service requirements apply. 

Community Water Supply/Sewage Disposal Requirements

If the property will be served by a community water and/or sewage disposal system, VA must be satisfied that the type of system and organization will provide adequate, continuous service at reasonable rates. 

The water supply must be sufficient in size for the project. The quality of the water must be approved by the local or State health officials. 

The sewage system must also be adequate in size and properly operated and maintained so as to prevent it from becoming obnoxious or a menace to public health. 

Documentation Required

For properties appraised as existing or new construction, the only requirement is evidence of approval of the facilities by the appropriate State or local public utility and health authorities. 

For properties appraised as proposed or under construction, the VA field station will review the following documentation: 

  • Evidence of the financial stability and technical experience of the corporation, firm or organization operating the facilities. 
  • Evidence of approval of the facilities by the appropriate State or local public utility and health authorities, and 
  • Rates for the water supply and/or sewage disposal systems (to ensure that they are not greater than the charges for like services to properties similarly situated). 

When a Trust Deed is Required

The trust deed will be designed and established to ensure satisfactory control and adequate protective measures if the State Board of Health, Public Utility Commission, or similar State authority does not enforce compliance with its requirements, fix rates, or provide for prompt relief in case of deficient operations or service or exorbitant rates. 

MPR Variations and Exemptions

VA may agree to modify the MPRs where justified by certain conditions common to a particular geographic area or occurring on the site, or where such conditions make compliance impractical or impossible. 

An MPR for existing construction can be waived by the VA field office if: 

  • A veteran is under contract to purchase the property, and 
  • The veteran and lender request the exemption in writing, and 
  • The property is habitable from the standpoint of safety, structural soundness and sanitation, and 
  • VA is satisfied that the nonconformity has been fully taken into account by way of depreciation in the VA valuation. 

 

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