The unique benefits offered to eligible veterans related to homeownership can be extended towards the purchase of a condo. You can avail all the VA loan benefits you are entitled to, even when buying a condo, provided it is a VA approved condo.
Condos offer a range of facilities that are generally not available in other types of residential properties. Most new and existing condominiums have a number of amenities and perks such as pools, gyms and clubhouses that are hard to find elsewhere. The security afforded by large condo communities is also highly desired by new home buyers.
If you are interested in obtaining financing for your new condo purchase through a VA loan, you need to make sure the condominium is VA approved. The changes introduced in 2010 have brought in significant changes to the process involved in VA condo approval.
VA Approved Condo Lookup
The VA website maintains an up-to-date list of all the approved condos that meet its requirements. You can perform a simple search and confirm the VA condo approval status instantly. There are a number of sites that regularly monitor the newly approved VA condos and present them in an easily accessible manner.
Is a FHA condo approval enough for VA loans?
The process involved in obtaining a VA condo approval is much different from the FHA condo certification process. Until very recently, a separate VA approval for condos was not needed as long as there was FHA approval in place. Condominium projects with FHA approval dated prior to December 7, 2009 can still satisfy the VA requirements for condos without any need for further processing. Even if a project has a FHA condo approval in place on or after December 7, 2009, a VA approval is mandatory. If any additional phases in a project have been annexed into a condo project on or after the stipulated date, the full review of all the documentation is needed to qualify as a VA approved condo. The same rules also apply to USDA and HUD approved condos.
VA Condo Approval Process
The VA condo approval process involves a number of steps and requires the submission of all the documents in proper format as required by VA. The total VA condo approval process can take 60 – 90 days from the submission of the full condo application to VA. While it is not mandatory to submit an attorney letter, it has shown to be effective in speeding up the entire approval process. A great thing about getting your condo VA approved is that it never expires once secured. Therefore, the added effort and costs can be easily justified over the long run.
VA Condo Eligibility Requirements
VA requires that the no less than 50% of the units in condo building or project be owner-occupied. This is a make or break condition when it comes to seeking a VA approval on a condo. VA also evaluates the delinquency rate when it comes to a HOA’s fees. VA requires that the arrears on HOA fees are below 15%.
If the condo you wish to buy is part of a newly constructed building, at least 75% of the units must be sold before VA can allow financing.
Condo Documents required for VA approval
The list of documents needed for VA approval of a condominium community can vary depending on the regional VA office processing your application. The guidelines for VA approval of a condo are not as detailed or structured as those involved in FHA approval process. Therefore, it may not be guaranteed that you obtain the VA approval in a timely manner. The final approval and duration will depend on each condominium’s merits.
While nothing can guarantee an approval as each evaluation is done on a case by case basis, the following are some of the documents that are commonly required to process VA condo approvals:
- Master Deed (Should contain all declaration related to covenants, conditions and restrictions)
- HOA Articles of Incorporation
- HOA Bylaws
- HOA Budget Plan
- Unless self-managed, the agreement regarding the management is needed
- Income and Balance Sheet
- The official minutes of the previous two HOA meetings
If the condo has never been approved before by any of the other government agencies such as HUD, FHA or USDA, then it is very important that a Attorney Opinion Letter accompanies the approval application. The contents and the format in which this important piece of documentation needs to be drafted are clearly detailed in the Section B of Chapter 16.
Additionally, survey maps and building plans may also be needed. If there are any recorded amendments for annexation exist, then they must be added included too.
The complete list of VA condo approval documents are detailed in Chapter 16 of the VA Lender’s Handbook. (http://www.benefits.va.gov/warms/pam26_7.asp)
Working with your HOA
If the HOA of the condo doesn’t have an approval in place, you may need to initiate the process to be eligible for your VA loan benefits. The above mentioned documents are not as difficult to obtain as they may seem. HOAs are legally bound to provide copies of all the above mentioned documents upon making a formal request. Submit a written request for the required VA condo approval documents in a proper format and pay the appropriate fees.
VA loan financing for approved condos
As VA allows financing only on the approved condos on its roster, it’s important that you work with a knowledgeable lender that specializes in VA mortgages. They can perform the initial review of the condo’s eligibility and guide you in the appropriate direction.
This initial review phase can also be beneficial to you as it involves the assessment of your overall loan eligibility in terms of VA benefits, income, assets and other documentation.