VA Mortgage Property Requirements: Simplified

Appraisal Requirements for an AZ VA Mortgage

What Does VA Think About Your Property? – VA Minimum Property Requirements

VA mortgage guidelines are very unique when it comes to property related requirements.  VA home loans (just like every other type of home loan) have specific requirements that a property must meet in order to be eligible for a VA home loan.  Why?  In short, VA wants to make sure that they are insuring mortgages for properties that are safe, sound and secure just like FHA, Fannie/Freddie and USDA do.  The difference between each different type of home loan is how sound, safe and secure are defined.  Each mortgage type also likes to come up with their own special acronym relative to property requirements (FHA has Minimum Property Standards or “MPS” and VA has Minimum Property Requirements or “MPR”).

What Are VA Mortgage Property Related Guidelines/Requirements:

VA outlines it’s property rules and regs in what they call the Lenders Handbook – VA Pamphlet 26-7 (specifically chapter #12 which is labeled “minimum property requirements”).  While I am sure reading all 23 pages of this one sub-section of the handbook sounds like a blast, let’s condense the info for you and help answer some of the most commonly asked VA property requirement related questions.  Ready?   Here we go!

VA Mortgage – General Space Requirements:

The property being financed must have space for the following:

1. Living
2. Sleeping
3. Cooking and dining accommodations (note: property must have a stove installed)
4. Sanitary facilities

VA Mortgage – Mechanical Systems:

The property being financed with a VA home loan must have mechanical systems that:

1. Are safe to operate
2. Are protected from destructive elements
3. Have reasonable future utility, durability and economy
4. Have adequate capacity and quality

VA Mortgage – Roofing:

The property being financed with a VA mortgage must have a roof that:

1. Prevents entrance of moisture
2. Provides reasonable future utility, durability, and economy of maintenance

* When a defective roof with three or more layers of shingles must be replaced, all old shingles must first be removed.

VA Mortgage – Heat/Air Conditioning:

A property that is being financed using a VA home loan must have:

1. Heating that is adequate for healthful and comfortable living conditions
*VA maintains separate guidelines for homes with a wood burning stove and Solar systems for domestic water heating and/or space heating 
*VA field stations may determine that climatic conditions are such that mechanical heating is not required.

If you are wondering why you do not see anything here related to VA air conditioning guidelines that is because like FHA financing, VA financing does NOT stipulate a separate set of guidelines for A/C units.  The guidelines only pertain to the heating unit in the home for both FHA and VA.  Apparently FHA and VA are not familiar with a Phoenix Arizona summer!!

VA Mortgage – Electricity:

Each unit included in the property being financed with a VA mortgage must have:

1. Electricity for lighting and for necessary equipment

VA Mortgage – Water Supply/Sanitary Facilities:

A property that is being financed with a VA loan must have the following in each unit:

1. Domestic hot water
2. A continuing supply of safe and potable water for drinking and other household uses
3. Sanitary facilities and a safe method of sewage disposal

VA Mortgage – Non-Residential Use:

Any home being financed with a VA home loan must demonstrate that:

1. Any non-residential usage of the property must be subordinate to its residential use and character

If any of the property is designed or used for non-residential purposes, that property is eligible only if the non-residential use does not:
1. Impair the residential character of the property OR
2. Exceed 25% percent of the total floor area (the total non-residential part of the calculation  must include storage areas or similar spaces that are integral parts of the non-residential portion)

As you can see, many of the guidelines create a situation where the appraiser is empowered and able to evaluate the property she is appraising objectively against the property guides set forth by VA.  As you can imagine, 5 different VA appraisers may very well analyze and appraise the same home in 5 different ways.   This is where much of the frustration in the Arizona Real Estate market comes from with regard to VA appraisals.  Real Estate professionals and AZ buyers often experience the VA appraisal process differently than someone else they know that has recently purchased a home.

While this drives buyers and agents crazy, it is important to realize the final decision is ultimately up to the appraiser the VA assigns to the property (this link is the best advise I can give you if you find yourself in this situation – SERENITY).   Yes, your AZ Mortgage Lender can rebut/fight the appraisers value and certain appraisal conditions however the bottom line is that typically the VA appraiser is going to stand by their opinion and their original report.  My goal is to help you understand the thought process that the VA appraiser goes through.

The Tip of the Iceberg – VA Mortgage Regulations:

While the guidelines listed above cover the most general and common questions that come up with regard to VA appraisals, there is a whole lot more where they came from.  The Minimum Property Requirements chapter also includes sections for:

1. Proposed construction MPR’s
2. Shared facility MPR’s
3. Access related issues
4. Hazard and defective conditions
5. Fuel pipelines and high voltage electric lines
6. Individual water supply/sewage disposal
7. Community water supply/sewage disposal requirements
8. Manufactured homes classified as real estate

The link to the entire MPR section of the VA handbook is here for your convenience: MPR GUIDES.  If you have any questions regarding VA’s minimum property guidelines please do not hesitate to call or email me.

By Jeremy House
Find us on Google+

VA MORTGAGE LENDER PHOENIX AZ

 

 

 

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Jeremy is the Founder of The HOUSE Team and a Sr. Loan Officer/Branch Manager with PrimeLending. Over the past several years he has ranked in the top 1% of all loan officers nationwide and one of the top 200 loan officers in America. In the mortgage industry, the devil is in the details. Jeremy prides himself on being a student and an expert when it comes to everything mortgage related.

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