Are VA Loans Limited to Specific Types of Homes?

For veterans and active-duty service members looking to buy a home, VA loans offer an incredible opportunity with benefits like no down payment, no private mortgage insurance, and competitive interest rates. However, one common question that arises is, "Are VA loans limited to specific types of homes?" The answer is yes, but with some flexibility. Let's explore the types of homes you can buy with a VA loan and any restrictions you might encounter.

"A hero is someone who understands the responsibility that comes with his freedom."- Bob Dylan, American singer-songwriter and Nobel Prize laureate

Understanding VA Loan Eligibility for Property Types

VA loans are designed to help veterans and their families achieve homeownership. While the program is flexible, it does have certain guidelines regarding the types of properties that can be purchased.

Single-Family Homes

Single-family homes are the most common type of property purchased with VA loans. These are standalone houses designed to accommodate one family. Single-family homes must meet the VA's minimum property requirements (MPRs), which ensure the home is safe, structurally sound, and sanitary.

Multi-Unit Properties

VA loans can also be used to purchase multi-unit properties, such as duplexes, triplexes, and fourplexes. These properties can have up to four units, and the borrower must occupy one of the units as their primary residence. This option is excellent for veterans interested in real estate investment while also securing a place to live.

Condominiums

Condominiums are another type of property eligible for VA loans, but there are some additional requirements. The VA must approve the condominium project. You can check if a condo is VA-approved through the VA’s website. If a condo is not already approved, the condo association or a lender can request VA approval, but this process can take some time.

Townhomes

Townhomes are similar to single-family homes and condos in terms of eligibility. As long as the townhome meets the VA’s MPRs and is part of a VA-approved project (if applicable), it can be purchased using a VA loan.

Manufactured Homes

Manufactured homes are eligible for VA loans, but there are stricter guidelines. The home must be classified as real property, which means it needs to be on a permanent foundation and taxed as real estate. Additionally, not all lenders offer VA loans for manufactured homes due to the perceived risk, so you may need to shop around to find a willing lender.

Modular Homes

Modular homes differ from manufactured homes in that they are constructed in sections off-site and assembled on a permanent foundation. These homes typically meet local building codes and are treated like stick-built homes. Modular homes are eligible for VA loans as long as they meet the VA's MPRs.

New Construction Homes

New construction homes can be financed with a VA loan, but the process can be more complex. The VA requires the home to be fully complete before guaranteeing the loan, meaning you might need to secure alternative financing during the construction phase. Once the home is complete, you can refinance into a VA loan.

VA Loan Property Restrictions

While VA loans are flexible, they come with specific restrictions to protect both the borrower and the lender. Here are a few key restrictions to keep in mind:

Primary Residence Requirement

VA loans are intended for primary residences, meaning you must live in the home as your main place of residence. You cannot use a VA loan to purchase a vacation home or an investment property you do not plan to occupy.

Minimum Property Requirements (MPRs)

The VA has established MPRs to ensure the home is safe, structurally sound, and sanitary. These requirements cover aspects like adequate roofing, a reliable water supply, proper sewage disposal, and more. Homes that do not meet these standards must be repaired before the loan can be approved.

Non-Eligible Property Types

Certain property types are not eligible for VA loans, including:

Cooperatives (Co-ops): These properties involve buying shares in a corporation rather than owning actual real estate.

Vacant Land: VA loans cannot be used to purchase undeveloped land without an immediate plan to build.

Commercial Properties: VA loans are strictly for residential purposes and cannot be used to purchase commercial properties.

Navigating the VA Loan Process for Different Property Types

If you're considering a VA loan for any of the eligible property types, here are a few tips to help you navigate the process smoothly:

Work with a Knowledgeable Lender | Find a Veteran Mortgage Advisor™️

Choose a lender experienced with VA loans and the specific property type you're interested in. They can guide you through the requirements and ensure you meet all necessary criteria. The VA Mortgage Vet team has helped thousands of veterans, active-duty servicemembers, and surviving spouses with their home purchases and refinances over the last 30 years.

Check Property Eligibility Early

Before falling in love with a property, verify its eligibility for a VA loan. This includes checking if a condo is VA-approved or ensuring a manufactured home meets all necessary guidelines.

Prepare for Inspections and Appraisals

VA loans require a VA appraisal to ensure the property meets the MPRs. Be prepared for this step and understand that any required repairs must be completed before closing. Although the VA does not require a home inspection, it is highly recommended.

Conclusion

VA loans are a fantastic benefit for veterans and active-duty service members, offering numerous advantages for purchasing a home. While there are specific property types and restrictions to be aware of, the program's flexibility allows for a wide range of home options. By understanding these guidelines and working with an experienced lender, you can successfully navigate the VA loan process and secure the home that best fits your needs.

FAQs (Frequently Asked Questions)

Can I use a VA loan to buy a vacation home?

No, VA loans are intended for primary residences only. You must live in the home as your main place of residence.

Are there property restrictions for VA loans?

Yes, the property must meet the VA's minimum property requirements and be a suitable primary residence. Certain property types, like co-ops and vacant land, are not eligible.

Can I use a VA loan to buy a multi-unit property?

Yes, you can use a VA loan to buy a multi-unit property (up to four units) as long as you occupy one of the units as your primary residence.

Are manufactured homes eligible for VA loans?

Yes, but the home must be on a permanent foundation and classified as real property. Finding a lender who offers VA loans for manufactured homes might require some extra effort.

How do I check if a condo is VA-approved?

You can check if a condo is VA-approved through the VA’s website. If it is not approved, the condo association or a lender can request approval, although this process can take some time.

For further advice on how to make sure your loan process goes as fast and smoothly as possible, please read our article titled: Can I Use A VA Home Loan More Than One Time?