VA Minimum Property Requirements – Manufactured Homes Classified as Real Estate

 

Deciphering the VA Lender’s Handbook Chapter 12 Part 11

 

The VA will usually only guarantee manufactured homes if they are classified as real estate – which generally means that they are fixed to a permanent foundation and they are located on a permanent lot. There are two types of construction that a manufactured home can fall under: existing construction and proposed/under construction. The VA’s Minimum Property Requirements are slightly different for each of the two cases, and it’s good for you to know the Requirements for whichever type of construction you are planning on working on. The home is classified as existing construction if the foundation has been fully completed and the manufactured home has been installed on it. The home is classified as proposed or under construction if the foundation has not been fully completed and/or the home has not been installed on the foundation.

VA Manufactured Home for Sale

For manufactured homes classified as existing construction, there are two MPRs that the VA has established. First, the site, manufactured home unit, and other on-site improvements must meet VA MPRs for existing construction described in earlier articles. In other words, being a manufactured home does not exempt it from having to meet all of the basic VA MPRs that the VA has for all existing construction. Second, 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. In other words, the foundation can’t be the result of you and Uncle Fred taking a wheelbarrow and a bunch of bags of cement mix out to the lot on a Saturday. Both the foundation itself and the way the home is attached to the foundation need to be strong enough to handle any weight or wind pressure that comes its way. In cases where the appraiser has doubts to the acceptability of the foundation and there are no local requirements to set a standard, the appraiser is allowed to require a statement from a registered professional engineer. However, since such statements are usually expensive, the appraiser is counseled not to require one unless they are really necessary.

 

For a manufactured home that is classified as proposed or under construction, the VA also has two MPRs specifically for them. First, the site and on-site improvements (but not the manufactured unit itself) must meet the requirements outlined in the MPRs for other proposed or under construction properties. Just like the existing manufactured home, the proposed or under construction manufactured home is not exempt from the basic MPRs that the VA has for properties being financed with a VA loan. Second, the manufactured 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. This requirement must be fulfilled before the home can be occupied by the veteran borrower. If you are interested in getting more information about manufactured home installations, a good place to check is the manufacturer’s installation instructions, which will have a lot of details about how the home should be attached to support vertical loads and anchoring systems to resist horizontal and uplift forces. The following table is taken from the Handbook and has the requirements for the foundation on a proposed or under construction case:

Foundation Component Requirement
Piers and Footings The load-bearing piers and footings must

  • be of sufficient size and numbers to distribute the weight of the manufactured home evenly
  • be of materials acceptable to the building authority having jurisdiction, and
  • (where applicable) have footings which extend below the frost line
Concrete Slabs or Continuous Footings
  • Concrete slabs or continuous footings are acceptable in areas where their use is permitted by local building authorities. Steel anchorage devices must be cast into the concrete slab or footing and be capable of providing holding strength to resist horizontal and uplift forces
Anchoring Devices Anchoring devices, adequate to resist all loads, must

  • be attached to the main frame of the unit by a bolted, welded, or mechanical connector
  • be placed at every supporting pier or as specified by the manufacturer, and
  • extend into the pier footing.

Anchoring straps or cables affixed to ground anchors, other than pier footings, will not meet this requirement unless specifically allowed by the building authority of jurisdiction.

Hurricane Ties Properties located in Wind Zone II or III (wind speeds in excess of 80 mph) must be provided with diagonal hurricane ties which have been properly engineered for the location, and comply with the requirements of the building authority having jurisdiction.
Important: The installation procedures included in both the manufacturer’s foundation instructions and NCS BCS Handbook A225.1 are not generally adequate for manufactured homes in these areas.
Flexible Connections for Seismic Activity Properties located in areas of high seismic activity require special foundation designs to compensate for the effects of ground movement and to provide flexible connections between the foundation system and the manufactured home and all utility connections.
Building authorities in these areas should be consulted for acceptable design features and special code requirements.
Permanent Perimeter Enclosure A permanent perimeter enclosure(not “skirting”)with a continuous foundation-type footing will be required only when specifically required by the local building authority.  When required, it must be

  • designed to resist all forces which cause frost heave, soil settlement, or the shrinking or swelling of expansive soils without transmitting the movement or effects to the manufactured home, and
  • properly secured to the perimeter of the manufactured home to exclude entry of vermin and water, and provide ventilation and a means of access to the crawl space.
Moisture and Humidity Reduction The reduction of moisture and humidity in an enclosed under floor space is required.  Except in arid regions with dry soil conditions, a continuous moisture barrier that covers the natural or excavated ground surface within the perimeter enclosure of the home must be installed.Provisions should also be made to prevent water from entering the crawl space and for the control and diversion of surface water away from the manufactured home.

VA Minimum Property Requirements – Community Water Supply/Sewage Disposal Part 2

 

Deciphering the VA Lender’s Handbook Chapter 12 Part 10

 

In the last article, we talked about the basic requirements that the VA has for properties using community water supplies and sewage disposal systems. At the end of that article, we mentioned “trust deeds” in regards to the water supply. In this context, a trust deed is simply a document that provides an agreement on the part of the supplier that is normally taken care of through other means. A trust deed is only required 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. In these cases, the purpose of the trust deed is to ensure satisfactory control and adequate protective measures in case of noncompliance, exorbitant rates, or deficient operations.

 

Probably the easiest way to understand what a trust deed does is to read the one found in the HUD Handbook 4075.12, which is what the VA generally requires without modification. The VA does not require a trust deed if the systems are owned and operated by an acceptable homeowners’ association. The VA will not supply the trust deeds because they expect you to use the HUD form linked in this paragraph. The trust deed is going to be acceptable to the VA as long as all the following is true:

  • the trustee is a responsible firm
  • the description of the property in the trust deed is accurate and complete, and
  • the charges set forth and trustee’s fee (normally about 5 percent and in no event in excess of 10 percent of gross receipts) are reasonable

Sewage Disposal

The VA prefers that the trustee of the trust deed be a VA-approved lender or at least an HUD-approved lender, but the trustee can be any responsible, established firm. Usually, this means a title company in the community. If the trustee is a title company, then possible conflicts-of-interest arise depending on the ownership and clientele of the title company, and the VA requires that there be no identity-of-interest between the sponsoring group and the trustee. So how does this affect you? It’s quite simple – you’ll be involved as the trust deed is worked out and agreed upon between the Trustee and the Grantor. This process takes time, and can affect how quickly you are able to get your VA loan approved and move into your new home. Also, if the supplier is not willing to sign the HUD trust deed, you will not be able to purchase your home with a VA loan.

 

The trust deed also takes into account the possibility that the control and maintenance of the water supply and sewage disposal systems may be transferred to a public utility company sometime in the future. The trust deed needs to establish a couple requirements for when a transfer takes place; the transfer is only allowed to be made to a governmental authority or public utility company that is controlled by a government body, and any funds that are gained from such a transfer must be distributed among the property owners served by the system. These requirements are essential in future-proofing the property’s water supply and sewage disposal systems, which is important in determining the remaining economic life of the property. If there is any lack of assurance that the service will be satisfactory or provided at a reasonable rate, the property will not necessarily be ineligible for a VA loan, but the lack of assurance will at least be reflected in a lower VA valuation of the property.

 

If the trust deed is amended or the conditions listed above are not met, then the local VA field station needs to review the situation and the trust deed before the VA loan can be closed. If this is the case, you should be prepared to have your VA loan delayed by a few weeks, because the VA field office may have to coordinate with the local HUD office to determine whether the amended trust deed is acceptable. A good rule of thumb, though, is if your water supplier is not willing to assure you of satisfactory service and reasonable rates, they are probably a supplier that you don’t want to work with.

 

VA Minimum Property Requirements – Community Water Supply/Sewage Disposal Part 1

 

Deciphering the VA Lender’s Handbook Chapter 12 Part 9

 

In the last article, we covered the VA’s requirements for individual water supply and sewage disposal systems. Individual systems are where the water is acquired and the sewage disposed of independently from the local community. Community systems are far more common and are when the property just plugs into the existing water and sewage system, which takes care of making sure that water reaches the property and that sewage leaves it. As expected, the VA has requirements that the community water supply and sewage disposal systems need to meet in order for the home being purchased to be eligible for the VA guarantee.

VA Construction Inspection

The main thing that the VA is concerned with is that the community systems in place will be able to provide sufficient service relatively constantly (barring some sort of emergency). Per the Handbook, “VA must be satisfied that the type of system and organization will provide adequate, continuous service at reasonable rates.” The water supply must provide enough water to meet the needs of the property being appraised, and the quality of the water must also be approved by local or state health officials. The sewage system must also be large enough to meet the needs of the property, and it needs to be operated and maintained well enough to prevent “…it from becoming obnoxious or a menace to public health.”

 

Depending on the type of construction that is being appraised, the VA may require different documentation. For either existing or new construction (either way, the house is built and ready for occupancy before you start the buying process), the VA just needs to see evidence of approval of the facilities by the local or State public utility and health authorities. If the property is either proposed or under construction, documentation is required that provides the following:

  • 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).

 

http://www.lowvarates.com/va-loan-blog/va-minimum-property-requirements-individual-water-supply/In other words, for houses that are either proposed construction (not started yet) or under construction (started, but not finished) the VA wants to make sure that the community facilities the property will be relying on are operated by competent bodies and have been approved by the local or State health authorities. There are many areas where the water supply and sewage systems are provided by private institutions, which is why the VA has the requirements they have for these systems. Additionally, in cases of proposed or under construction properties, the builder can be part of the same company as the water suppliers, or have a contract with the supplier. In these cases, the builder may try to recoup the cost of installing the system on the property in the sale price of the home and through the service rate charged for the water and sewage. The VA does not allow this. If the builder is recouping their costs by having the cost of installation included in the VA’s valuation of the property, they are not permitted to recoup the costs a second time through the service rate, and vice versa.

 

To the average borrower, most of this information is not something you necessarily need to know. However, if you do know, you have the ability to quality-check all the houses you are considering buying. You really should think to ask the seller of the home how the utilities – including the water – are provided, and if you are building a home with your VA loan or working to buy a home that’s currently under construction, finding out where the home will get its water supply and sewage disposal services is a really good step to finding out if it’s going to pass the VA appraisal. In the next article, we’re going to talk about when a trust deed may be required. A trust deed affects the borrower and is something you should be aware of and understand.

 

VA Minimum Property Requirements – Individual Water Supply

 

Deciphering the VA Lender’s Handbook Chapter 12 Part 8

 

In the last article, we got started on the VA’s requirements for a property’s water supply. We discussed how the VA requires the water quality for the property to meet local requirements or the EPA’s acceptable contaminant levels. We also mentioned that if the local health authority is not able to perform an analysis then a commercial testing lab can do the analysis instead. The entirety of Chapter 12 of the Handbook is dedicated to the VA’s Minimum Property Requirements, so if you’re looking for more information on all the requirements for a property to be financed with a VA loan, reading all our articles on Chapter 12 is the best place to start. In this article, we’re going to start by talking about the VA’s requirements for water treatment systems.

Veterans Home Water Supply

There are two scenarios where a property may have (or need) an individual water treatment system. The first is if the water for the property comes from a well, and the second is if the aquifer that serves an area is confirmed to be contaminated. In both scenarios, an individual water treatment system is required. In the case of wells, there are other VA requirements that the VA has the well itself, and if the well does not meet those requirements then having a water treatment system will not be sufficient. We’ll go more over those requirements for wells in a separate article. If the aquifer serving the area is confirmed to be contaminated, the property can still be approved for VA a loan as long as all of the following is provided:

  • a copy of the health department letter confirming the aquifer contamination
  • evidence that all of the requirements in HUD Mortgagee Letters 92-18 and 95-34, concerning individual water purification systems, have been met for the property, and
  • the veteran purchaser’s written acknowledgment that he/she understands that the well-water serving the property must be continuously treated by the homeowner, as required by the local health department, to be considered safe for human consumption.

 

While a well may serve a single property, it is also possible that a well may serve multiple properties. Such a well is known as a ‘shared well’. The VA permits shared wells to provide the water for a VA-guaranteed property but has several requirements for the shared well in order to be approved. First, the well must be capable of providing a continuing supply of safe and potable water to all of the properties simultaneously so none of the properties will be in want of water. Second, there must be a permanent easement in place which allows access for maintenance and repair, and there must be a well-sharing agreement in place that does at least the following three things:

  • makes reasonable and fair provisions for maintenance and repair of the system and the sharing of those costs
  • is binding on the signatory parties and their successors in title, and
  • is recorded in local deed records.

 

If the property is served by a spring or cistern, the VA will approve it as long as springs/cisterns are customary in the area and are the only feasible means of water supply. They need to be installed in accordance with local health Home Sewage Disposalrequirements, and the veteran borrower must sign a statement that he or she is aware of the situation. In cases where the local health authority does not have requirements, then the U.S. Public Health Service requirements apply.

 

The VA’s requirements for individual sewage disposal systems are very simple: it needs to do it’s job and not bother or endanger anyone in the process. The Handbook states, “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.” I think we can all agree that those are reasonable expectations of a property being purchased for someone’s primary residence. Lastly, “pit privies”, commonly referred to as ‘kybos’, are permitted as waste disposal only in areas where they are both customary and the only feasible means of waste disposal. The U.S. Public Health Service requirements or the local health authority’s requirements apply.

 

VA Minimum Property Requirements – Fuel, Electric, and Water

 

Deciphering the VA Lender’s Handbook Chapter 12 Part 7

 

The Minimum Property Requirements don’t have too much to say about gas and petroleum pipelines or electric lines. They do, however, have a lot to say about water. So we’ll cover the fuel and electric line requirements in this article first, then get started on the water requirements. The rest of the water requirements will be covered in subsequent articles. If you want to know what the VA’s MPRs are and you also want to know what they mean to you, you’re in the right place, and we encourage you to read all of the articles on the MPRs that you are interested in learning more about. Learning the MPRs is invaluable for a VA borrower in all stages of the purchasing process. Knowing the MPRs can help you select a house that will fulfill them, help you know what concerns will need to be resolved with the seller long before the appraiser ever gets there and help you read the appraisal and challenge it if need be.

 

VA Property EasementTo understand the fuel pipeline MPRs, you have to know what an ‘easement’ is. An easement is a legal right or agreement to use or cross someone else’s property for a specific purpose. For example, if you live on the corner of a busy street and a cul-de-sac, you might have a big green metal box on your property. There is likely an easement in place for workers from the power company to access that green box without your permission. The VA doesn’t have an issue with an easement in place on a property for high-pressure gas or liquid petroleum pipeline – as long as no part of the residential structure is located within the easement. Any detached improvements (such as a shed), that is partially or completely within the easement will not be able to receive a value as part of the appraisal. Fuel lines can cause problems even for properties that are not within an easement if a residential structure is within 220 yards of the centerline of the pipeline. If this is the case, the appraiser will need one of the following:

  • High-Pressure Gas Pipelines – A statement from an authorized official of the pipeline company certifying compliance with 49 CFR 192.607, 192.609, 192.611 and 192.613.
  • Liquid Petroleum Pipelines – A statement from an authorized official of the pipeline company certifying compliance with 49 CFR 195 and amendments thereto.

 

The requirements for high voltage electric transmission lines are very similar to the requirements for gas and fuel lines – no part of the residential structure may be located within the easement, and any detached improvements that are partially or fully within the easement will not be considered as part of the Notice of Value. There are two main reasons for these requirements for fuel lines and electrical lines. The first is a potential safety concern, and the second is a privacy concern; if part of the residential structure is within the easement, then utility workers are legally allowed to enter the home without permission and without notice for maintenance and repairs to the line.

 

Water

Water MPR

Let’s get started with water. The MPRs about water falls into two different categories: Individual requirements and community requirements. We’ll be covering individual requirements first. The property’s water system and sewage disposal system must be connected to a public or community system whenever feasible. The water on the property must be of a quality sufficient to meet the requirements for the health authority that has jurisdiction over the property. If the local authority does not have any requirements, then the maximum contaminant levels established by the EPA are considered the requirements. The water will have to be tested as part of the appraisal, so be ready for that. Either the local health authority is required to come test it, or, if they cannot do so in a timely manner, a commercial testing laboratory or licensed sanitary engineer can perform the test as well.

 

In the next article, we’ll get into water treatment systems. The importance of having clean and safe water on the property is difficult to overstate; clean water is one of the things we absolutely must have to survive. It makes sense that the VA wants to make sure that the water on the property is safe for use.

 

VA’s Minimum Property Requirements – Hazards and Defective Conditions

 

Deciphering the VA Lender’s Handbook Chapter 12 Part 6

 

So far in Chapter 12 we’ve covered a lot of the VA’s Minimum Property Requirements (MPRs). We started by going over the basic MPRs that all properties are evaluated on, then we covered the MPRs concerning shared facilities, shared utilities, and access to and around the property being purchased. In this article, we’re going to cover the VA’s requirements about potential hazards and defective conditions. We’ll talk about drainage, termites, and lead-based paint, as well as some of the other most common concerns that come up during appraisals – especially in older homes. If you’re purchasing a newer home, chances are you won’t have to worry about these MPRs. If you’re purchasing an older home, however, these are things that you should watch out for long before the appraisal since they can dramatically affect the livability of the property.

Home Hazards

The VA requires that the property being appraised must be free of any hazards which might do any of the following:

  • adversely affect the health and safety of the occupants
  • adversely affect the structural soundness of the dwelling and other improvements to the property, or
  • impair the customary use and enjoyment of the property by the occupants.

These hazards are both numerous and varied, but we’ll cover some of the most common ones, which should help you be prepared for the appraisal and give you a heads up of the type of thing that the VA will consider a problem.

 

The VA classifies a “defective condition” as any condition, “…which impairs the safety, sanitation, or structural soundness of the dwelling.” As mentioned in the paragraph above, such a condition presents a problem. If a dwelling has a defective condition, the property will be unacceptable for purchase with a VA loan until the condition has been taken care of and the chance of further damage has been significantly reduced. Some examples of what the VA considers a defective condition are: defective construction, poor workmanship, evidence of continuing settlement, excessive dampness, leakage, decay, and termites. Some of those problems can be so difficult to get fixed that it is simply not worth it, and nothing forces the seller to take care of those things as part of the sale.

 

Another thing that might disqualify the property is the site drainage. The site is required to be graded enough that water is drained positively and rapidly away from the exterior walls of the dwelling and prevents ponding of water on the site. Stagnant water is a breeding ground for a host of issues, many of which can cause significant problems to the livability of the house. Thankfully, many drainage issues are actually fairly easy and inexpensive to solve. If you have your heart set on a house that has a drainage issue, see if the seller is willing to take care of it, and even if he or she is not, it may be simple and cheap enough for you to just take care of it yourself.

Home Drainage Condition

Appraisers are required to look for evidence of wood-destroying insects, fungus, and dry rot, but discovering any of those may not automatically disqualify the home. The issues will most likely need to be resolved before the house can be sold, but this is not true 100% of the time. However, even if the VA appraisal is not a concern for you, evidence of any of those things should be, even if they are just in the beginning stages. If you can take care of those things early, then they won’t cause as large of issues later on.

 

One of the biggest issues that arise with older homes is the presence of lead-based paint. The Handbook clearly states that “Lead-based paint constitutes an immediate hazard that must be corrected…” The exception to this rule is if the level of lead in the paint is at a level below that permitted by law. Generally, though, if it’s lead-based paint, it’s going to have too much lead in it. The appraiser is required to assume that a defective paint condition (cracking, scaling, peeling, etc.) on any interior or exterior surface on a property built before 1978 involves lead-based paint. They are also required to clearly identify the location of such conditions, and recommend corrective action.

 

Corrective action must either be a thorough washing and wire-brushing to remove all of the cracking or peeling, then repainted with at least two coats of non-leaded paint, or the paint needs to be completely removed or covered with wallboard, plywood, or plaster.

 

VA Minimum Property Requirements – Shared Facilities and Access Issues

 

Deciphering the VA Lender’s Handbook Chapter 12 Part 5

 

The last couple of articles covered the basic Minimum Property Requirements (MPRs) that the VA has established for all properties financed with a VA loan. In this article, we’re going to start getting into more case-specific MPRs that may not come up at all. We’re going to start by covering the MPRs in relations to shared facilities and utilities, then we’ll jump onto access-related issues.

VA Construction Loans

The VA MPRs allow for shared facilities such as laundry, storage space, or heating “…in two-to-four living unit buildings under a single mortgage.” Other scenarios in which facilities might be shared shouldn’t come up due to the nature of the VA loan program; the loan can only be used to purchase a home to be the borrower’s primary residence, and not for renting a property. Utility services, on the other hand, must be independent for each unit, with only two exceptions, as follows:

  • living units under a single mortgage or ownership may share water, sewer, gas, or electricity as long as there are separate service shut-offs for each unit, and
  • living units under separate ownership may share connections from the main to the building line when those connections are protected by
    • easement or covenant, and
    • a maintenance agreement acceptable to VA.

 

Also, the VA stipulates that the utility lines serving one living unit cannot pass over, under, or through another living unit unless there is a permanent legal arrangement that will allow the borrower to make repairs and perform maintenance on the lines without being considered trespassing on the adjoining properties. As you can see, the VA does its best to reasonable and flexible with the MPRs. The most important thing is that the livability of the property for the veteran is not negatively affected.

 

Now we’re onto access-related issues with the property. The VA wants to make sure that the veteran has all the normal, expected access to the property. The first requirement is that the property must have safe and adequate pedestrian or vehicular access from a public or private street. If it is a private street, it must be protected by a permanent easement, and maintained by either a homeowners association or joint maintenance agreement. Whether it is private or public, the street must have an all-weather surface. Additionally, the VA requires that the borrower be able to access their living unit without having to pass through the property of any other living unit. The VA also requires that each unit must be able to be completely used and maintained on its own without trespassing onto adjoining properties. The Handbook also states that “Any easements required must run with the land.”

 

Continuing with the theme of not having to cross anyone else’s property, the VA requires that the backyard be accessible without having to pass through any other living unit. Now, this doesn’t mean that you have to have a back-door and patio leading out onto your perfectly manicured back lawn; the access can be by means of an alley, easement, passage through a common area (like in a condo building) or by any other acceptable means. The means of passage are generally acceptable as long as they don’t go through another living unit. The last requirement the VA has on this topic is that there is sufficient access for the borrower to be able to maintain the exterior walls of their living unit as needed.

 

The next article will be covering the VA’s MPRs in regards to hazards and defective conditions. If you are wanting to learn about all of the VA’s MPRs, we encourage you to read all of the articles of this series, or you are welcome to peruse Chapter 12 of VA Lender’s Handbook on your own, which you can find here.

 

The VA’s Basic MPRs That Apply to All Homes Part 2

Deciphering the VA Lender’s Handbook Chapter 12 Part 4

 

This article will cover the rest of the Basic MPRs as listed in Chapter 12 of the VA Lender’s Handbook. Specifically, we’ll be talking about heating systems, water supply, sanitary facilities, roof covering, crawl spaces, ventilation, and electricity. If you’re looking for introductory information on the VA’s MPRs, you should start with Chapter 12 Part 1.

Warming a Veterans Home

The first MPR in regards to heating is very simple: it must be adequate for healthful and comfortable living conditions. Homes with wood burning stoves as their primary heating source can fulfill the MPRs as long as there is also a conventional heating system installed that maintains a minimum of 50 degrees Fahrenheit in areas with plumbing. This is because wood burning stoves aren’t the best for spreading heat throughout an entire house, especially areas where plumbing might run, and the risk of winter freezes needs to be taken care of in some way so that it doesn’t cause constant trouble for the veteran. Solar heating systems are perfectly acceptable, as long as they meet the following two requirements:

 

  • meet standards in HUD Handbook 4930.2, Solar Heating and Domestic Hot Water Heating Systems, and
  • be backed-up 100 percent with a conventional thermal energy subsystem or another backup system which will provide the same degree of reliability and performance as a conventional system.

Note that in some areas, the VA may have a variation that states that climatic conditions do not require a mechanical heating system.

 

The VA requires that every unit on the property has its own hot water, and a continuing supply of safe and potable water for drinking and other household uses. The VA also requires that there be sanitary facilities and a safe method of disposing of sewage. There are further details on the VA’s requirements for water supplies and sanitary facilities, but we’ll cover those in more depth in a later article. Generally speaking, as long as the water system provides what we mentioned above and is in good repair, it will pass the VA’s MPRs.

Safe and Secure Roofing

The VA’s MPRs about the roof are pretty simple: it can’t leak and it should be able to last for the foreseeable future. The Handbook says that the roof must “prevent entrance of moisture and provide reasonable future utility, durability, and economy of maintenance.” The Handbook also states that when a defective roof with three or more layers of shingles is being replaced, all of the old shingles first need to be taken off before the new shingles can be put on. This will not be surprising nor onerous for experienced roofers. In addition to the roof covering, the MPRs also address the crawl space and attic. The MPRs state that the crawl space needs to have adequate access, be clear of all debris, and be properly vented. Also, “the floor joists must be sufficiently above the highest level of the ground to provide access for maintenance and repair of ductwork and plumbing.” Any standing water or dampness in the crawl space needs to be corrected for the home to pass the appraisal.

 

The VA requires adequate ventilation in the attic and crawl space in order to prevent excessive decay and deterioration of the structure. The MPRs state that ‘natural’ ventilation of those spaces is required, which means that ventilation will occur even if the power is shut off to the home. Lastly for the basic MPRs, the VA stipulates that each living unit must have electricity for lighting and necessary equipment. I know, that last one is a shocker. No pun intended.  The basic MPRs are all aptly named: basic. You’ll find that nearly all of the MPRs are along the same vein as these basic ones, in that they are things that nearly every informed buyer would want to make sure the home they’re buying has. While some of the items we’ll talk about aren’t going to be as obvious as others (like the roof not leaking), nearly all of them are things that just about everyone is going to want their home to have.

 

The VA’s Basic MPRs That Apply to All Homes Part 1

 

Deciphering the VA Lender’s Handbook Chapter 12 Part 3

 

Now we’re starting to get down into the good stuff. In the previous article, we talked about the VA MPRs (Minimum Property Requirements) that only apply to proposed construction, and in the article before that we gave a basic overview of the VA’s MPRs. If you haven’t read Chapter 12 Part 1 before reading this, you’ll probably want to go back and read it first, since this article builds on Part 1 and assumes that the reader already knows everything that Part 1 talks about. The basic MPRs are things that aren’t usually an issue, but can come up, especially if the borrower is getting creative with how he or she is using their VA loan benefits. This article will specifically cover the entity itself, nonresidential uses of the property, space requirements, and mechanical systems in general.

 

The first MPR listed is that the property must be a single, readily marketable real estate entity. In other words, you can’t use a VA loan to purchase more than one property at a time, or to purchase anything that is not considered real estate (e.g. a car). The next few MPRs have to do with any nonresidential uses of the property. The MPRs state that any nonresidential use of the property must be subordinate to the residential use. In other words, commercial use is acceptable, as long as the property is primarily residential. The appraiser uses two specific ways of determining whether this is the case:

 

  • First, the nonresidential use of the property cannot impair the residential character of the property, and
  • the nonresidential portion of the property does not exceed 25% of the total floor area. When the appraiser makes this calculation, he or she is required to include any storage areas or similar spaces that are integral parts of the nonresidential portion of the property.

 

It’s really the second of those two requirements that prevent most commercial use of VA loans, because it’s much more common to have a commercial space that has an apartment above it than a house that has a store space in the front. The basic MPRs also cover space requirements. The VA requires that each living unit on the property (usually only one), has enough space to reasonably accommodate living, sleeping, cooking and dining, and sanitary facilities for the number of occupants that will be living in the home. What is determined sufficient is mostly up to the appraiser. A single veteran with no children is going to be able to purchase a smaller space than a married veteran with 3 high school-aged kids. While some of the things we have mentioned so far may have surprised you, most of the rest of the MPRs are actually pretty obvious.

MPRs

The VA MPRs in relation to the mechanical systems are fairly common sense; they must be safe to operate, be protected from destructive elements, have reasonable future utility, durability, and economy, and have adequate capacity and quality. Mechanical systems generally include things like power, lighting, HVAC, plumbing, and sprinkler systems. It should be fairly obvious why the VA would want those things free from destructive elements and be usable for the foreseeable future. Electrical systems, in particular, can pose a severe threat to the safety of the occupants if it is not up to spec. If you’re looking at buying an older home, it would be smart to ask the seller as many questions about the wiring in the house as you can think of. Now, the appraiser is not a specialized inspector; they won’t be able to tell you whether there are problems with any of the mechanical systems unless the problem is readily apparent through observation. If you would like a thorough professional inspection of one of the mechanical systems, you should hire a professional in that field to come conduct the inspection.

 

In the next article, we’ll get into the VA’s MPRs on heating, water supply, sanitary facilities, roof covering, crawl spaces, ventilation, and electricity. If you have any specific questions about the VA appraisal that aren’t answered in these articles, feel free to contact us at Low VA Rates and we’ll do our best to answer your questions.

 

VA Minimum Property Requirements for Proposed Construction

 

Deciphering the VA Lender’s Handbook Chapter 12 Part 2

 

The VA’s MPRs for proposed construction are different depending on whether there is a building code enforced in the area that the home is being built. If the property is located in a jurisdiction that has a state, county, or local building code, then the VA’s MPRs are that the construction must comply with:

Proposed Construction

  • 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
  • additional HUD references (we’ll talk about these in a minute)

 

In areas where there is not a state, county, or local building code enforced, the VA MPRs are a bit different. They require that the construction comply with the following:

 

  • 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

 

In both types of areas (those with state or local building codes and those without), the VA MPRs include compliance with several HUD references and publications. As you’ve noticed above, understanding the VA MPRs for proposed construction is a very involved process. Since the VA defers to CFR and CABO regulations, and those regulations are wordy and involved, there are few circumstances that reasonably justify going through all of the regulations to understand what’s required – unless you are acting as your own contractor, in which case you are likely already familiar with these codes. In most situations, the extent of your responsibility as the borrower will be to make sure that the contractor you’re working with is aware of the VA’s MPRs and the requirements involved. The builder, lender, and the appraiser should take care of the rest.

 

As for the HUD regulations, unfortunately, they do not get less involved. The VA’s MPRs include compliance with the following, taken directly from the Handbook:

 

  • HUD engineering bulletins and materials releases that address
    • the use of new or unconventional construction methods, or
    • materials that have been reviewed and considered suitable from a technical standpoint by HUD, and
  • standards and practices recommended in HUD Handbooks
    • Handbook 4140.1, Land Planning Principles for Home Mortgage Insurance
    • Handbook 4140.2, Land Planning Procedures and Data for Insurance for Home Mortgage Programs, and
    • Handbook 4140.3, Land Planning Data Sheet Handbook.

 

Those HUD handbooks are available online if you are interested in reading up on those requirements. As you read those HUD publications, the VA Lender’s Handbook specifies that you can read all references to “HUD” and “HUD field office” as “VA” and “VA field station” respectively, and that you can read “insured mortgage” as “VA-guaranteed mortgage”. Also, in the HUD handbooks, there will be differentiations made between single-unit homes and multiple-unit properties. As far as the VA’s MPRs are concerned, a property with up to four living units is considered the same as a property with only one living unit.

 

As you can tell, a lot of knowledge and research goes into building a home, especially one that is going to be paid for with a VA loan. You should take into consideration all of the VA’s MPRs for proposed construction if you are planning on building your home, because there’s a good chance that you would be biting off more than you can chew. Generally speaking, unless you are a professional with years of experience, you probably should go for a new or existing construction rather than using your VA loan benefits to try and build your own house. There are enough pitfalls that it’s very easy for an inexperienced builder to fall into one. If you have your heart set on building your own home with your VA loan benefits, you should seek out a contractor who has built homes for the VA loan program before and is very familiar with the VA’s MPRs.

 

VA Minimum Property Requirements – Overview

 

Deciphering the VA Lender’s Handbook Chapter 12 Part 1

 

Chapter 12 is all about the VA’s minimum property requirements. In this article, we’re going to be talking about the purpose of the MPRs, their scope, their variations, and their exemptions. All of this information will be very valuable to you as the borrower so you can look for a home that meets the MPRs, and if you want an exception to an MPR, you’ll know how to get one. The first thing we’re going to talk about is the definition of the MPRs and their purpose.

Minimum Property Requirements

The VA’s minimum property requirements are general criteria that a home must fill in order to be eligible for the VA guaranty. From the Handbook: “VA Minimum Property Requirements (MPRs) provide general acceptability criteria for properties which will become the security for VA-guaranteed loans. The purpose of the MPRs is to provide a baseline of quality for homes that veterans are purchasing with their benefits. It is very important to the VA that the use of a veteran’s benefits does not result in the veteran being in a worse situation than he or she was before. The VA wants to make sure that a veteran is able to purchase a home that will suitably meet their needs at better terms than they could otherwise get. The MPRs are meant to determine that the home is safe, structurally sound, sanitary, and that it, “meets the standards considered acceptable in a permanent home in its locality.”

 

The scope of the MPRs discussed in this chapter usually includes existing construction and proposed construction. There are some MPRs that only apply to proposed construction, but those will be clearly defined. Also, there are additional MPRs that apply to homes in the Specially Adapted Housing Program. We’ll talk about all of the specific requirements in the MPRs in future articles, including the SAH MPRs. Any type of home you are able to purchase with a VA loan will be subject to the MPRs, so as far as scope goes, the MPRs cover every VA loan purchase.

 

There are some variations in the VA MPRs, however, that are usually based on geographic location. There are some cases where the VA has agreed to modify the MPRs due to certain conditions that affect all the properties in a certain geographic area, or even just on the site itself. These variations are usually in place where compliance with the normal MPR would either be impractical or impossible, and the adjustment of the MPR does not affect the livability, safety, or stability of the home. We’ll talk more about specific variation in a future article on this chapter. Different from variations are exemptions from an MPR.

VA Loan Exemptions

Exemptions are done on a case-by-case basis, where variations are usually pre-established for a certain area or situation. Exemptions need to be specifically requested by the veteran and lender in order to be evaluated, and must meet certain conditions. The decision is made by the VA field ofice and can be made if the following four conditions are all met:

 

  • 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
  • the VA is satisfied that the nonconformity has been fully taken into account by way of depreciation in the VA valuation.

 

As the fourth bullet touches on, an exemption from a VA MPR is likely to have a negative effect on the valuation of the property. This is one of the main reasons you don’t want to request for exemptions for every little thing, the other one being that there has to be solid reasoning that the home is still safe, secure, and sanitary even without compliance to the MPR in question.

 

Starting in the next article, we’re going to go over all of the MPRs for different types of construction. The article titles will accurately represent what each article covers, and you can take a look at whichever article(s) apply to the type of home you are looking to purchase. There are a few obvious reasons why you would want to be aware of the MPRs, and a few less obvious ones.

 

  • You need to be able to pick a home that is going to fulfill the MPRs
  • You need to be able to read and understand the appraisal in case there is legitimate reason to challenge it
  • You may be able to talk the seller into making repairs on the home because you can throw the book at him/her.
  • You’ll increase your overall understanding and knowledge of what makes a home a good buy, even if you don’t use your VA loan benefits in the future.

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