Getting a VA Loan for a Condo – The Nuts and Bolts

Typically when someone thinks of buying a home, they picture in their minds a nice home with some landscape down a nice neighborhood street somewhere in Suburbia. But in many cases, a condo project will meet the needs and desires of a couple much more easily than a home. There are often many questions asked about condos and whether one can use their VA loan benefits to purchase a condo instead of a traditional home. The short answer to that question is yes, a VA mortgage can be used for more than just a ‘normal’ home. The long answer, where all the details are hashed out, comes below.

A VA loan can only be used for a condo if that condo is on the VA’s list of approved projects. If a condo project is not on the approved list, it can be submitted to be evaluated by the VA to see if it can be approved. There are a list of procedures that have to be followed in order to have a condo project approved by the VA. The first thing that needs to happen is the VA needs to receive from the lender (not the borrower, mind you, the lender) two things: a written request for VA approval, and a copy of the condo project’s organizational documents. However, there’s much more to the process than simply submitting documents and waiting for a response. A VA-approved lender will be familiar with the process, and this is one reason why it is the lender’s responsibility and not the borrower’s.

A lot of the differences between getting a loan for a home and getting a loan for a condo only make sense when taking into account the difference between a condo and a house themselves. The best way to describe the difference between a condo and a house is that a condo project is much like a very strict Homeowner’s Association or HOA, in that there are always restrictions on modifications you can make to the outside of your home, restrictions on pets, what age of people can live there, and other things that make it so only like-minded people will be your neighbors. A condo also typically does not have as much space as a home, and does not require you to maintain the outside of your property. Maintenance such as lawn-mowing and snow removal are covered by condo fees, and are arranged by the condo project board. With a home, you have as much control over the inside and outside of your property that the law permits.

After documentation on the condo project has been submitted to the VA, it must be reviewed to make sure that the project complies with all VA regulations. Before any lot or unit in the project can be purchased using a VA loan, the VA must approve the project as a whole. Even after approval, the VA might have a list of special conditions that must be met before the a VA loan closes on one of the units. These can be things like pre-sale requirements, or restrictions about the completion of the project. These can be major things that affect the construction of the condo project like VA requirements for common areas and other things. A condo project can absolutely be denied VA approval when there are deviations from the VA requirements, even when an “approval” has been received along with a list of special conditions.

A project can be denied based on a lot of factors, the most principal being incomplete documentation, either inaccurate or inconsistent information about the condo project, or anything that could suggest that the condo project board are not the most able or honest body. Ultimately, the VA is trying to determine whether the condo project really will  meet the needs of the veteran and that it is in good, responsible hands that will ably help the condo project to last as long as the veteran needs it to. Once denied, the only way the VA will re-evaluate it is if there is additional information presented that wasn’t brought up before. If the project has already been approved by the Department of Housing and Urban Development or the United States Department of Agriculture, then there is no further review required by the VA, and they will approve it as well.

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