What Kind of Properties Are Eligible for VA Home Loans?

The VA lends on most property types.

Since the end of World War II, America's veterans and their surviving spouses have purchased millions of homes using a benefit program provided by the Veteran's Administration, the VA Home Loan Guaranty Program. This program allows veterans to purchase many different types of homes throughout the United States. While VA allows most home types, there are some that are excluded.

History

President Franklin D. Roosevelt signed the G.I. Bill of Rights on June 22, 1944. This legislation included the establishment of the VA Home Loan Guaranty Program, among other benefits for America's veterans. This program is for veterans and their surviving spouses to purchase a home with little or no money down. In exchange for this, the veterans pay a funding fee to assist in the cost of the guarantee.

Detached Housing

The VA permits the purchase of detached residences, up to four units, in its program. Single-family homes are the most common home type purchased, and the VA has financed millions of these styles of homes. The VA will also finance two-plex, three-plex and four-plex homes. However, these must be zoned correctly as multi-family detached housing (no modifications not approved by the county), and the appraisal must demonstrate a market for them to be approved (recent comparable sales).

Condominiums

Condominiums generally qualify for VA loans. The VA must approve all condominiums and their associations prior to full loan approval. The mortgage lender is responsible for obtaining all of the required documentation and submitting it to the VA for approval if the project is not already on the VA's approved condominium list. Typically, the VA looks for a low percentage of investment-owned condos, and the association must be in good financial shape and not involved in a lawsuit.

PUDs

PUDs (planned unit developments) are similar to condominiums as both have homeowners' associations. However, when purchasing a PUD, the homeowner owns the entire structure, inside and out. Condominium owners only own the inside of the condominium while the homeowners' association owns and maintains the outside of the building. Historically, PUDs were referred to as townhomes as they were attached single-family houses. Many single-family neighborhoods are now considered PUDs so the homeowners' association can keep and enforce covenants for the neighborhood. The advantage of PUDs is everyone must agree to abide by the covenants; this helps keep values stable and neighborhoods maintained. Both attached and detached PUDs are acceptable to the VA.

Modular Homes

Modular homes are treated like single-family homes with the VA. Modular homes are built in sections away from the home site then assembled on the property. Since these are factory-built, they tend to be less expensive than a standard, site-built home. Modular homes do not have axles or tow hitches on them at any time as would mobile homes.

Manufactured Homes

The VA recognizes manufactured homes which are permanently attached to the foundation and have the axle and hitch completely removed. These homes are completely built off-site and brought to the property for placement on the foundation. Eligible manufactured homes are taxed as real property, and have purged titles as they are no longer mobile homes due to the removal of the wheels and axles.

References

• Veterans Benefits Administration: Eligible Properties (PDF)
• Veterans Benefits Administration: VA Appraisal Guidelines May 2010 (PDF)
• GI Bill: History

Resources

• LoanGuarantyHomeLoanProgram: Construction and Valuation Frequently Asked Questions