Are you wondering about the VA loan inspection requirements? There are appraisal and inspection guidelines that VA inspectors must follow.
Did you know that the homes you’re looking at might not be acceptable to some lenders? It’s true.
Special loan programs like the Federal Housing Administration (FHA) and Veterans Administration (VA) loans are outstanding for those who can take advantage of them—but there are some inspection and appraisal requirements for these programs.
Buyers and sellers must know these conditions when dealing with VA loans.
There are inspection requirements for FHA loans, too.
If you are a buyer seeking a VA loan, you need to find a home that meets the condition requirements of the program you are using—or work out a way for the repairs to be made before the sale—to get the loan.
If you are a seller, you want to be aware of the repair requirements of these loan programs in case you need to sell to a buyer getting such a loan.
The excellent rates and improved loan options these loans offer are made possible because the FHA or the VA is backing the loan.
They want to ensure the home they help purchase is re-salable in case the borrower defaults on the loan—so they will not make exceptions for necessary repairs.
Ultimately, the repairs must be completed before the closing for the loan to be approved.
From years of experience, buyers, sellers, and real estate agents must be familiar with the loan guidelines.
VA Loans Are Attractive Mortgage Options
There are many advantages to using a VA home loan for veterans and those in the military service. Borrowers who qualify don’t need a down payment to be eligible for these home loans.
The qualifications and credit scores are also more relaxed than other loan programs. Your debt-to-income ratio can be higher without being disqualified.
There are benefits to a VA loan that a buyer might not want to pass up just because they need to make some repairs. FHA and VA loans are two of the most popular mortgage programs among first-time home buyers.
If you are considering using one of these mortgage programs, here is what the lender will need to approve the loan. There will be different document requirements for each loan type.
One of the downsides to be aware of is the funding fee a borrower must pay. The funding fee is one of the elements you must account for when considering the property’s price.
Facts About Property Requirements
1. VA loan inspection requirements are guidelines the Department of Veterans Affairs set for properties purchased using a VA loan.
2. One of the primary purposes of the inspection is to ensure that the property meets the VA’s minimum property requirements (MPRs).
3. VA MPRs include criteria for structural integrity, safety, and sanitation of the property.
4. The inspection may also identify potential hazards or repairs needed.
5. Meeting the VA loan inspection requirements is essential for approving a VA loan and ensuring that the property is a safe and suitable home for veterans and their families.
What is The Basis For Property Condition?
When granting a VA loan, there will be minimum property standards that these government institutions will accept.
The inspections required for a VA loan will look at the following items. The VA appraiser will be in charge of ensuring the VA is protected.
- Safety: The house should protect the health and safety of the residents.
- Security: The house should protect the safety of the property.
- Soundness: The property shouldn’t have any physical deficiencies or conditions affecting its structural integrity.
Below is a detailed accounting of the property condition requirements for VA loans:
VA Loan Inspection Requirements
Here is a detailed overview of the home inspection requirements for a VA loan. You can use this as your VA loan inspection checklist.
- Public road access – the home must be accessible from a public road, and the road needs an all-weather surface. Private road access requires an easement.
- Walls need to be accessible for maintenance purposes
- The home must be available without needing to go through another home, such as if you had to go through one apartment to reach another apartment.
- Yards must be accessible without needing to trespass illegally through the yard or unit of another party. So, there cannot be any property encroachments.
- Damaged paint that could contain lead means the paint on homes built before 1978 must not be flaking or peeling.
- Utilities must surround independent units, including electricity, natural gas, sewer or septic system, and running water.
- Appliances should be in working condition.
- There must be working facilities.
- The home must be the buyer’s primary residence, not be used as a rental property.
- The house needs to have sufficient heat for safety and comfort. Homes with a wood-burning stove as the primary heat source must also include a secondary heating system capable of heating to make the air 50 degrees and circulate that air through the plumbing.
- Fresh, safe water must be available, reliable, and sanitized in the home.
- There must be an adequate water supply.
- All areas requiring ventilation for safety must have them, including basements, crawl spaces, and attics.
- The house must be comfortably habitable, having enough room for the buyer to live, eat, cook, and sleep.
- No structural defects.
- No foundation defects.
- There cannot be drainage issues that damage the property.
- Plumbing issues cannot be significant, including severe plumbing leaks.
- Rotten wood on the exterior of the home should be replaced.
- Any property impairment that makes the home unsafe or unsanitary.
- Drainage issues that cause water to accumulate in the yard, driveway, walkways, etc.
All of these VA requirements for a home inspection must be met for loan approval to be given.
Do VA Loans Require Home Inspections?
No. Inspections for homes are not required, but they are undoubtedly recommended. Without an inspection by a licensed home inspector, you will not know the property’s actual condition.
A home inspector’s job is to identify any issues with the property. Forgoing an inspection raises the possibility of buying a house with significant problems.
For most, a step in buying a house is to have a thorough general inspection. Many will also have reviews for items potentially outside the scope of the general inspection, including checking for radon, mold, and the quality and quantity of the water if there is a well.
If there is a septic system instead of public sewers, that is also likely to be inspected. A septic system is costly to replace, so it is worth checking.
A VA loan, however, requires a VA appraisal. So, VA inspectors are licensed appraisers. During VA appraisals, they will check to ensure the property meets VA inspection requirements.
Pest Inspection Guidelines
While a traditional home inspection is not a requirement of the VA, a pest inspection is for specific states. When the VA appraiser observes a potential pest issue, the VA will require a wood-destroying pest inspection in particular states and low-rise and high-rise condo units.
Veteran’s United Mortgage has an excellent resource that covers what states must have a VA pest inspection.
Property Requirements For Checking Termites
It also requires a termite inspection in more than half the states in the US. Due to increased termite infections, the VA required an inspection in regions where the probability of having termites has grown.
They refer to this as having a moderate chance of potential termite infestations. Veteran’s United also covers these areas where termite inspection requirements are raised.
Well Water Obligations
When a property you purchase has well water, one of the VA inspection requirements includes a well test. The well water testing must pass the quality guidelines for the local community for portability.
The well test must come from an independent third party and be sent to a lab for analysis. A well test will only be valid if performed in the last ninety days.
Septic System Inspection Guidelines
A home with a septic system must be inspected and have a passing test when there is a VA loan. If the inspection discovers problems, they must be corrected to close on the property. Proper and functioning sewage disposal is one of the minimum property requirements.
Licensed inspectors must complete septic inspections.
An Appraisal vs. Traditional Inspection
The function of a VA appraiser is to provide the lender with a fair market value for the property. Mortgage lenders want to ensure the property is worth what the buyer is paying.
A VA appraiser also has a different job to perform for these loans. So, the appraisal process is different. Appraisers must provide the lender with a VA inspection.
Their role is to ensure the home is acceptable and no significant issues would harm anyone. The VA appraiser aims to ensure that the property meets the inspection requirements for a VA loan.
Home buyers should understand that a VA appraiser is not qualified to make decisions such as the home’s structural integrity. Licensed home inspectors undergo hours of training before they have those qualifications.
The difference can be significant. A licensed inspector will carefully examine the roof, foundation, crawl spaces, attic, systems, insect damage, and dry rot. They will look for damage and other issues that could impact homebuyers.
A VA appraisal will look more at surface conditions, whereas a home inspector dives deep into the state, looking at the structure from every possible angle.
Like other home loans, an appraisal report will be submitted for the subject property. While an appraiser may flag issues, there will not be a traditional inspection report.
How Quickly Are The Appraisals Inspections Done?
VA appraisals are usually done within a few weeks of the property going under a contract between the buyer and seller. The lender will order the appraisal once the buyer has made a formal loan application.
Who is Responsible For What’s Required?
These loan programs do not specify whether the buyer or seller needs to make the repairs. Often, the buyer will request that the seller make the repairs. After all, the seller is the homeowner and would generally be expected to make repairs to make the house habitable and desirable to buyers.
But this is not always the case. Often, buyers will be motivated to make the repairs to get the loan and home they want.
Sometimes, some issues are rather grey. For example, one of the common problems that come up with VA properties is no peeling or chipped paint.
For a conventional loan, having a home that needs a paint job is not an issue. Of course, a buyer can see that before they make an offer. Buyers can and do factor that they will need to paint the home at some point in the future.
It can become contentious when a lender says certain areas of the home need to be fixed. From a seller’s perspective, it is easy to understand why they would not want to make insignificant repairs to peeling or chipped paint when they wouldn’t normally be expected to do that.
Who Will Complete The Home Inspection Prerequisites?
Ultimately, the buyer and seller must determine who should be responsible for VA’s required repairs. The purchase offer should clarify the buyer’s expectations concerning repairs to meet loan requirements.
Exceptional real estate agents will also set expectations with their clients when involved with VA mortgages.
Sellers must review the purchase offer carefully, particularly if considering an FHA or VA buyer, to determine if the repair requests are fair and tolerable to the seller. The repairs may be limited by a spending limit set by the buyer or the seller.
The buyer might ask for the seller’s permission to make repairs to meet the loan requirements. If the seller is comfortable with the plan, they can agree to proceed with the repairs to close the deal.
Buyers should be careful to determine if the repairs they plan on making are worth the investment. Getting certain homes up to the standard of the VA loan program could cost a considerable amount of money.
Sellers should be aware that some buyers may switch from a conventional loan to a VA loan in the middle of the transaction. If this happens, it is vital to look closely at the deal to see if it still makes sense after meeting the loan requirements is all said and done.
Repairs for Non-Permitted Additions
Without a doubt, with government loans, the most significant repair concerns are health and safety issues and the home’s structural soundness.
One concern that happens to be at the forefront of the real estate industry is work done in a home without a required permit. If you are buying or selling a home, it is essential to know the consequences, whether it is a government loan or not.
Some cities and towns are coming down hard on people who do not have required building permits. In some extreme cases, they will make you rip out all the work you have completed.
Can you imagine finishing your basement only to be told it all has to come out?
Non-permitted additions and remodels are pretty often not finished to current building codes.
The VA might require that these items be brought up to code, or they could also not consider these structures in the property’s value.
Who Provides The Homes’ Condition to The Lender?
As mentioned, a certified VA appraiser will appraise the property when buying a home and using VA financing. The VA must approve these appraisers because they are government loans.
The appraiser must follow stricter standards, as you can see in the above detailing of VA appraisal and inspection requirements.
With VA mortgages, it is not enough for the property to meet all local building codes and health and safety standards. The property condition levels are set to a higher standard. These rigid standards are designed to protect the lender in default.
So, while the objective in an appraisal with a conventional loan is solely about the property’s market value, with a government loan, it is also about the property’s condition.
Here is an excellent guide on what to know about real estate appraisals.
Negotiating Repairs With VA Loans
Once the appraiser reports the home’s condition to the lender, they will give the buyer a compliance notice. This letter will memorialize what needs to be done to the property to bring it into compliance.
The bottom line is that if an issue threatens the health and safety of the occupant or the structure itself, it will most likely be marked as “subject to repair.” This is a significant theme that is stated throughout the appraisal guidelines.
Years ago, a seller was the one who was always required to make the repairs. As previously mentioned, the buyer, the seller, or a combination of the three can tackle the problems discovered during the VA appraiser’s inspection.
You might wonder how to get the work done if a quick closing has been agreed upon between buyer and seller. What if you can’t hire a contractor to finish the job before the agreed-upon closing date?
Sometimes, in real estate transactions, there can be time constraints. Please don’t despair, as it is possible to have an escrow holdback agreement. Dealing with a quick closing does not preclude you from the transaction happening.
With the holdback, the lender will keep some of the seller’s proceeds until the work is completed. The buyer can complete the work themselves after the closing.
FAQs
Are There Any Restrictions For Properties in a Flood Zone?
Absolutely! There are indeed some restrictions on properties located in flood zones. The Department of Veterans Affairs (VA) has implemented specific guidelines to ensure the safety and well-being of veterans and their families.
These guidelines require that properties in flood zones meet specific criteria to be eligible.
For instance, the property must have flood insurance coverage that meets the National Flood Insurance Program (NFIP) requirements. Additionally, the property must be built in compliance with local building codes and flood prevention and mitigation regulations.
This ensures veterans enjoy a safe and secure living environment while utilizing their VA loan benefits.
Are There Any Specific Requirements For Heating and Cooling Systems(HVAC)?
Yes, a property has specific requirements for heating and cooling systems. The Department of Veterans Affairs (VA) has established guidelines to ensure that a property’s heating and cooling systems meet specific standards.
These guidelines include the need for a functional heating system capable of maintaining a minimum temperature of 50 degrees Fahrenheit throughout the property during winter months.
The air conditioning must be in good working condition and maintain a comfortable temperature during the summer months. The VA also emphasizes the importance of energy efficiency, encouraging properties to have systems that meet or exceed Energy Star ratings.
These requirements ensure veterans purchasing homes can access safe and comfortable living conditions.
What Role Does Pest Control Play in The Condition Requirements?
Pest control plays a crucial role in the inspection requirements for a VA loan. The Department of Veterans Affairs (VA) has strict guidelines to ensure that the financed property is free from any pest infestations that could compromise its structural integrity or pose health risks to the occupants.
During inspection, a licensed pest control professional thoroughly assesses the property for signs of pests such as termites, rodents, or insects.
If an infestation is detected, the VA requires that it be addressed and resolved before approving the loan. This ensures that service members and their families can purchase safe and free homes from potential pest-related issues.
Final Thoughts
When buying or selling a home that is not in stellar condition, it is crucial to understand the ramifications of using VA financing.
It’s vital to have a handle on the situation before spending lots of time and money on a deal that won’t work. Is the seller willing to cooperate either monetarily or through repairs?
You should know upfront before getting involved with a transaction where an owner wants to sell their house in as-is condition.
If I can answer any questions or you need advice, please get in touch with me.
Additional Real Estate Resources Worth Reading
- What to know about FHA closing costs – see a detailed guide on everything you need about closing costs with an FHA loan.
- Comparing an FHA loan to a Conventional loan – a great comparison between an FHA and a conventional mortgage. See the pros and cons of an FHA loan vs. traditional financing.
Use these additional mortgage resources to make sound decisions when buying or selling a home.
About the Author: Bill Gassett, a nationally recognized leader in his field, provided the above real estate information on the requirements for a VA loan inspection. He is an expert in mortgages, financing, moving, home improvement, and general real estate.
Learn more about Bill Gassett and the publications he has been featured in. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of Metrowest towns for the last 38+ years.
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