Buying a home is likely the largest purchase you will make during your lifetime. It is a major financial undertaking that requires patience, time, and a large amount of effort. However, the good news is your family with kids or retired spouse can enjoy the benefits of the VA Home Loan with the condo of your dreams.
VA loans are available to honorably discharged veterans, those who are active-duty service members who've served 90 days or more, and personnel who have served at least six total years in the reserves or the National Guard. The advantages of a VA Home Loan are also extended to the surviving spouse of a service member.
Condo Finance Advantages with a VA Loan
Guaranteed by the Department of Veteran’s Affairs, VA loans offer incredible advantages to purchasing your condo. You may not receive these financial benefits with a traditional home loan and only find flexible loan support with a government-backed program.
- No Down Payment: VA loans offer 100% condo financing, unlike many other types of home loans.
- Competitive Interest Rates: Since the VA guarantees your VA loan, lenders will offer lower interest rates on compared to other loan programs in many cases.
- No Private Mortgage Insurance (PMI): Conventional loans require borrowers to have specialized insurance, but VA lenders waive PMI. They have confidence in the government to pay a portion of your condo’s value if you default on the loan.
- Relaxed Credit Score Requirements: Many banks require a high credit rating above 750. However, VA Loans are much more flexible and can offer finance options with a score as low as 580.
- Higher Loan Limits: In most states, the VA loan limit is higher than general loans. This makes your dream condo that much more affordable.
- No Pre-Payment Penalty: Conventional loans charge a fee if the loan is paid off early. VA borrowers who work to get debt-free, on the other hand, won’t have extra pre-payment fees.
Using a VA Loan for Condominiums
Buying a condominium is a great option for military members with a VA Home Loan. One of the biggest reasons for you to consider a condo is affordability. Condos almost always cost less per square foot than single-family homes. They can be a great option if you have kids and are looking for a temporary residence for a few years.
Also, they are very low maintenance. Traditional homeowners are responsible for all exertion upkeep, but the HOA will cover those expenses with a condo. They will even pay for some internal repairs. You and your partner can have the satisfaction of homeownership without all the responsibility involved.
Another advantage is that condo complexes have amenities that appeal to families and retirees. You can find exercise rooms, community barbecue pits, swimming pools, and playgrounds right in your backyard.
It’s crucial you and your partner understand the VA’s rules and regulations on which condos qualify before you start house hunting. Not every condo will pass these codes, and you will have to start from scratch if you didn’t do your research beforehand.
The government has an online page where you can request the VA to create a customized condo report for the property you’re interested in. They will evaluate the property on your behalf and let you know if it passes their inspection.
Your VA lender can also assist in this process and communicate with your real estate agent, so they know which properties to show you. They can inform whether your condo is approved or not for the VA Loan Program
Condo Requirements for VA Loans
To obtain approval status for your family’s desired condo, here are some of the requirements the VA will consider.
- Location. Your VA loan condo must be located in the United States or a U.S. territory, such as Puerto Rico, Guam, or the U.S. Virgin Islands. Properties in foreign countries are not eligible for VA loan approval.
- New Condo. If you are considering a newly constructed condo, both the builder and the building site must be approved by the VA, and the builder must provide a one-year home warranty. VA inspections are also required during and after construction.
- Owner Occupied. In most states, at least 50 percent of the condo units must be occupied by their legal owners and not be rental units. If the complex is brand new, the usual requirement is that 75 percent must already be sold.
- Appraisal. A VA appraisal is required when using a VA loan to buy a condo. Besides estimating its market value, a VA-approved appraiser thoroughly checks the home to make sure it meets the minimum condo requirements set by the U.S. Department of Veterans Affairs. In the past, the VA accepted properties that were HUD accepted(Department of Housing and Urban Development) as VA approved. This is no longer the case, but chances are if the property is HUD accepted, VA approval will be given without too much trouble.
- Residence Only. The VA offers this loan option to help make owning a residence more affordable for military personnel and their families. This means that your VA loan is meant for residential purposes and not as an investment opportunity. You cannot use your VA home loan to purchase a vacation home or rental property.
The Role of DTI in a VA Loan for Condos
As you search for a condo, you will find that the debt-to-income (DTI) ratio is an important measurement when it comes to getting a VA home loan. This measurement examines your monthly debts compared to your monthly income.
Your monthly debt includes your total monthly expenses, such as credit card payments, student loans, car loans, and personal debts.
In most states, VA loans allow for a maximum 41percent debt-to-income ratio. This means your total monthly debts, including your projected VA mortgage payment, can’t exceed 41% of your monthly pre-tax income.
Apply for a New VA Loan with the Help of an Expert
The primary challenges in using a VA Loan to buy a condo are the excessive paperwork and overwhelming deadlines. There may be a lot involved, especially while you’re an active-duty serviceman or servicewoman raising a family.
We are a dedicated, veteran-run team that focuses on integrity, open communication, support, and honesty. Jimmy Vercellino, the producing branch manager, specializes in serving veterans and active duty military with VA Home Lonas.
It would be our pleasure to take you and your partner through the VA Loan Journey and help you settle down into your dream home. Also, if you are relocating to an Arizona military base like Fort Huachuca or Davis-Monthan Air Force Base, we can guide you every step of your condo-buying journey.
You can reach Jimmy directly by calling his personal phone at (602).908.5849. Jimmy or another VA loan officer will be available to answer all your questions.