A condominium – condo, for short – is an individually owned, private unit within a community of other similar units. Condo owners own the interior walls of their property while jointly sharing the condo’s exterior with the community.
Military members, veterans and surviving spouses of fallen service members can use the VA home loan program to finance a condo.
Condo ownership offers some advantages:
- Condo fees cover exterior maintenance and landscaping – one less thing for deployed military members to consider.
- Community condominium ownership means you’re always close to neighbors if you need help.
- Condo mortgages qualify as a tax deduction, unlike rent for a similar property.
The VA’s lender handbook, VA Pamphlet 26-7, provides details on VA mortgages, including condo approval guidelines, eligibility, fees and appraisals.
How to Use the VA-Approved Condo List
First, check VA’s easy-to-use approved condo list to find a VA-approved condo or determine if a condo is eligible for VA financing.
If you don’t see your condo on the VA’s list, find out if the Department of Housing and Urban Development (HUD) or the United States Department of Agriculture (USDA) has already approved it. Projects with HUD or USDA approval may not need further review, according to the VA.
If the condominium isn’t on any government agency’s approved complex list, it may be because the condo developer or association has not yet applied to the VA for approval.
In this case, your lender can help you apply for VA approval. However, this process takes time. Look for a condo in a pre-approved development if you need to purchase a home quickly.
If your condo isn’t on the list, the VA may have already reviewed and rejected the condo project for failing to meet VA requirements.
VA Condo Approval Requirements
Condo purchases fall under specific VA requirements that affect both buyers and lenders. For example, lenders must ensure condos are on the VA’s approved condominium list or meet the criteria to apply for approval.
The VA mandates several condo purchase loan requirements to protect the financial interests of veteran borrowers:
- The VA will only finance condos from its pre-approved list. Veterans can request a Customized Condo Report on properties they are interested in purchasing.
- At least 70% of the units in a condo community must be sold or under contract at the time of any VA borrower’s loan application.
- The condo owner’s association (COA) must offer specific owner rights, such as the right to examine the association’s financial records.
- The COA may not impose a right of first refusal clause, which dictates who a condo owner can sell to and when. If a COA or homeowner’s association (HOA) has such a clause, it must waive it for VA borrowers.
Buying a Condo with a VA Loan
The VA also requires specific documents before it will approve a loan, according to its lender handbook.
Required Documents May Include:
- Declaration of covenants, conditions and restrictions
- HOA or COA bylaws
- HOA or COA articles of incorporation
- Plat, map or air lot survey of the condo project and its units
- Condo development plan and schedule
- Existing and proposed HOA or COA budgets
- Minutes from HOA or COA meetings
- HOA management agreement.
Your regional VA loan center will review and approve submitted documents during your loan underwriting process. Keep in mind that the VA or your lender may request additional documents.
Keep in touch with your real estate agent and your VA loan underwriter to fulfill requirements as quickly as possible.
VA loans offer competitive terms and benefits but may feature more complex approval processes than conventional loans. The average VA loan approval time is 15-30 days, according to the VA. Once you get approved, you may be able to close on a property within three to four weeks.
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