Section 2.2

Buying a House with a VA Purchase Loan

If you've served in the military and are planning on buying your own home in the future, a VA loan is one of the best options out there.

However, if you've never bought a home before, or used a VA home loan, there are some things you need to know about VA purchase loans and how their process works.

VA Loans Can Only Be Used on Certain Types of Homes

When you want to use a VA purchase loan to buy a home, it's important to know that you won't be able to purchase just any type of home.

Approved Home Types for VA Loans

The good news is that even though there are some limitations, there are still plenty of homes that will qualify for a VA loan. Some of these approved home types include:

  • Single-family homes
  • New construction homes
  • Manufactured homes with a fixed foundation
  • Multi-unit homes (up to four units)

As you can see, there's a lot of flexibility for the types of homes you can buy with a VA loan. Whether you want to live in a condo, a home with your own private yard, or even one that's custom-built to fit your dream specifications, a VA home loan can help you finance it.

Home Types That Are Not Approved for VA Loans

That being said, we do still need to address the limitations on home types VA loans do have. Basically, if you want to use a VA loan, you won't be able to purchase:

  • Fixer-uppers, since they rarely pass the VA appraisal
  • Any cooperative (co-op) housing units or apartment buildings
  • Investment or commercial properties
  • Manufactured homes without a permanently fixed foundation
  • Any vacant land

The good news is that these limitations apply to an incredibly narrow set of home types. The most common types of homes first-time homebuyers usually want are all approved for financing with a VA loan.

But, how do you actually go about getting a VA home loan for the kind of home you want? Well, now that you know what is and isn't allowed on a VA purchase loan, it's time to dive into understanding the actual process of what it's like to get one.

How the VA Purchase Loan Process Works

Even though buying a home for the first time can seem overwhelming, VA purchase loans are actually pretty straightforward, as long as you're working with someone who knows what they're doing. (Like us here at Low VA Rates.) To make sure you're prepared for the process, here's a quick overview of all the major steps of a VA purchase loan.

Contact a VA Lender

One of the first things you need to do in order to get a VA purchase loan is to contact a VA lender. They'll be able to help you confirm that you meet the VA's service eligibility requirements.

Confirming your eligibility is a fairly quick, easy process with the help of an experienced VA lender. They'll be able to request your Certificate of Eligibility—your COE—in a matter of seconds.

This document comes directly from the VA, and it lists whether or not your service meets the VA's eligibility requirements, among other information. But as long as your lender sees that your service qualifies, you should be able to move forward towards getting a pre-approval.

Get Pre-Approved

Before you can really start looking for a home, you have to get pre-approved by a lender. Without a pre-approval letter, most sellers and real estate agents won't take you seriously.

A pre-approval letter shows them that a lender has looked at your finances and is willing to, likely, lend you money for the home. However, it is important to note that a pre-approval is still not a guarantee of a loan.

Find a Home

Once you've gotten your pre-approval, it's time to start working with a real estate agent and begin your actual home search for properties that fit within your budget.

At this stage, finding a real estate agent who is familiar with VA loans can be incredibly beneficial, even if it isn't technically necessary. However, because VA loans are so unique, an agent with experience will be able to help you navigate these quirks during the actual hunt for a house.

One example of how a VA-experience agent can help you is by only showing you homes that are likely to pass the VA appraisal. Their familiarity with the appraisal's requirements means you won't see a property that would never pass. Or, as another example, during the search they can steer you towards homes in areas that are more likely to sell quickly when it's time to PCS.

Make an Offer & Get a VA Appraisal

Once you've found a home you love, it's time to put in an offer. If your offer is accepted, you'll need to reach out to your lender so they can schedule your appraisal with a VA-approved appraiser.

During the appraisal, the assigned appraiser will verify that the home is safe for occupancy, its structure is sound, and the living conditions are sanitary. These standards are measured by what the VA calls minimum property requirements, or MPRs.

A few specific examples of some of the MPRs they'll be evaluating include making sure the home:

  • Is actually residential
  • Has working electricity with no exposed wires
  • Has working heating and cooling systems
  • Has no mold on the walls
  • Is free of termites and other pests
  • Has proper water and sanitation systems
  • Doesn't have lead-based paint
  • Has enough room for occupancy
  • Can be entered year round
  • Has proper roofing

The VA appraisal is a vital step in the process because if the home doesn't pass, you won't be able to buy the home with a VA purchase loan.

However, it is important to note that the first failure means you're done for good. If the seller is willing to work with you and make some necessary repairs, you can then have a follow-up appraisal, which the home would then, hopefully, pass.

Another thing you should be aware of is that the appraisal is not the same as getting an inspection. For liability reasons, the appraiser cannot make any suggestions on home repairs, and their walkthrough is not as in-depth. Instead, their primary responsibility is to simply estimate if the home is fairly priced and make sure it meets the MPRs.

Finally, while it's not required for a VA loan, most lenders (including us here at Low VA Rates) recommend that you also get an inspection done on any home you want to purchase. Their more in-depth look at the property can help you decide if the home is really up to your standards and expectations.

Closing on the Home

After you've passed the appraisal portion of the VA purchase loan, it's time to close on your new home.

This is by far the most exciting step of the process because it means you've finally realized the American dream: you own your own home!

At closing, you sign a bunch of documents that legally transfers ownership of the home into your hands. Then you'll get the keys and be able to actually move in.

Start the Process for Your Own VA Purchase Loan

While the VA purchase loan can seem intimidating to future homeowners, we hope this overview helps you understand how the whole process works, and that it gives you peace of mind before you embark on buying your first home with a VA loan on a home purchase.

The VA purchase loan is remarkably beneficial for qualifying servicemembers because it can help you find and afford your dream home. At Low VA Rates, we'd love to be a part of that story and help you through every step of the VA loan process.

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