Can You Get a Condo with a VA Loan?

If you’ve served in the military or are currently active-duty, you may already know that the Department of Veterans Affairs (VA) offers special home loan programs to help you purchase a home.

But what if you’re interested in condominium living? Can you use a VA loan to buy a condo?

The simple answer is yes, but there are specific guidelines you need to follow to ensure a successful purchase. This article will walk you through every step.

Condos can be an appealing option for many service members, veterans, and their families. They often require less maintenance, offer community amenities, and can be more affordable in certain markets. However, it’s crucial to confirm that your target condominium meets VA standards to finalize your financing smoothly.

Understanding VA Loans

VA loans are government-backed mortgages that allow eligible borrowers—active-duty service members, veterans, and some surviving spouses—to purchase homes with favorable terms. These loans typically offer:

• No down payment (in most cases)
• Competitive interest rates
• No private mortgage insurance (PMI)
• Flexible credit requirements

While these benefits attract many homebuyers, you must still meet certain criteria to qualify. First, you need a Certificate of Eligibility (COE) from the VA. This document confirms your entitlement to VA home loan benefits. The property you’re buying must also meet minimum property requirements (MPRs), designed to ensure it’s safe and structurally sound.

Key Requirements for VA Condo Purchases

When it comes to VA approved condos, the guidelines are slightly more specialized than buying a single-family home. Here are the basic requirements you should know:

• VA-Approved Condo List: The condo project must be on the VA-approved list of condominium developments or become approved during your loan process.
• Primary Residence: Your condo must be your primary residence. You generally can’t use a VA loan to buy investment properties or vacation homes.
• Occupancy Requirements: The VA typically requires you to occupy the property within 60 days of closing, although exceptions exist for deployed personnel.
• HOA & Property Management: The homeowners association (HOA) and property management must meet VA guidelines, ensuring financial stability and consistent maintenance.
• VA Appraisal: A VA appraiser will evaluate the condo to ensure it meets the VA’s Minimum Property Requirements.

As you explore condos, keep these requirements top of mind. If the condominium isn’t already on the VA’s approval list, there may be a path to secure approval, but it can add time to your home-buying journey.

How to Check if a Condo Is VA-Approved

Before you get too attached to a particular condo unit, it’s wise to confirm if the entire development is VA-approved. Here’s a quick overview of how to do this:

If you find out the condo is already VA-approved, you can proceed with your purchase more quickly. Otherwise, you’ll need patience and cooperation from the condo association, since they must provide documents like bylaws, financial records, and insurance information to the VA for review.

Step-by-Step: Buying a Condo with a VA Loan

Now that you understand the basics, let’s walk through the typical steps to use a VA loan for a condo purchase.

Step 1: Obtain Your Certificate of Eligibility (COE)

The COE is your golden ticket to prove you’re entitled to VA home loan benefits. You can request it through the VA’s eBenefits portal, or your lender can help you acquire it. Ensure that all your service documents, such as your DD-214 (for veterans), are readily available to expedite the process.

Step 2: Identify a VA-Approved Condo

Before submitting an offer, confirm if the condo appears on the VA’s approved list. If not, you or your lender can initiate the approval process. Be prepared for extra steps, including supplying the condo association’s legal documents, HOA budgets, and other necessary paperwork to the VA.

Step 3: The VA Appraisal & Home Inspection

Once you’re under contract, your lender orders a VA appraisal to confirm the condo meets the VA’s property requirements and is valued at or above the purchase price. Keep in mind, a VA appraisal is not the same as a comprehensive inspection. You should still hire a professional inspector to assess the condo’s overall condition.

Step 4: Closing Costs & Loan Finalization

If everything checks out, you can move toward closing. Although VA loans typically require no down payment, there are still closing costs, which may include appraisal fees, credit reports, and title insurance. In many cases, sellers or lenders can help cover part of these costs. Finally, you’ll sign all the necessary paperwork, and once the funds are distributed, you officially become a condo owner.

Common Expenses: HOA Fees & Maintenance

HOA fees are a standard part of condo living and can vary widely based on location, amenities, and the association’s financial health. Before you commit to a purchase, consider the following factors:

• HOA Fees: These cover shared amenities (pool, gym, security), insurance for common areas, and exterior maintenance.
• Special Assessments: If the condo building requires unexpected major repairs, you may have to pay extra fees for a set period.
• Maintenance Costs: Most interior repairs remain your responsibility, but the HOA usually handles exterior elements, like the roof or landscaping.

The VA wants to ensure that you can comfortably afford the property, including your mortgage, insurance, property taxes, and HOA fees. Your monthly expenses play a role in your loan approval process.

Pros and Cons of Using a VA Loan for a Condo

Like any financial decision, using a VA loan to buy a condo has advantages and disadvantages. Weigh these carefully as you consider your next move.

• Pros
  • Minimal to No Down Payment: This can make homeownership more accessible for qualified borrowers.
  • No PMI: Unlike FHA or conventional loans with low down payments, VA loans don’t require private mortgage insurance.
  • Flexible Credit Requirements: VA loans often accept lower credit scores compared to other mortgages.
  • Potentially Lower Interest Rates: Government backing can lead to more competitive rates.
• Cons
  • VA Funding Fee: While you can roll the VA funding fee into the loan, it increases your total debt.
  • Condo Approval Process: If the condo isn’t already VA-approved, it can add complexity and time to your purchase.
  • Primary Residence Requirement: Limits your ability to use the loan for vacation homes or investment properties.
  • Property Restrictions: Certain condo associations may choose not to pursue VA approval due to extra paperwork.

Comparison: VA Loan vs. Conventional Loan

Sometimes you may find a condo that doesn’t want to undergo VA’s approval process. In that case, you might consider a conventional loan. Here’s a quick comparison to help you decide which financing option fits your situation.

A VA loan can be a fantastic tool if the condo meets the VA’s standards and you want to minimize your upfront costs. However, a conventional loan may offer more flexibility if you’re considering buying a second home or an investment property.

Top FAQs

1. Is it harder to buy a condo with a VA loan?

It can be slightly more challenging if the condo is not already on the VA-approved list. The main hurdle is getting the condominium association to provide all necessary documents and comply with VA guidelines. If a development is already VA-approved or willing to undergo approval, the process is often smooth, offering the same benefits as purchasing a single-family home.

2. What if the condo is not VA-approved?

If the condo is not VA-approved, your lender or the condo association can apply for approval. This involves submitting legal, financial, and insurance documents to ensure the development meets VA standards. Approval can take extra time, and some HOAs may be reluctant to go through the process. Alternatively, you might consider a different financing option or a different property.

3. Do HOA fees affect my VA loan eligibility?

Yes. Lenders factor your monthly HOA fees into your debt-to-income (DTI) ratio when determining how much you can borrow. A higher HOA fee might reduce your overall borrowing limit. Always consider HOA dues and any potential special assessments when deciding if a condo is within your budget.

4. How is the VA appraisal different from a home inspection?

A VA appraisal focuses on the property’s fair market value and basic safety standards. Its purpose is to ensure the condo is worth at least the agreed-upon sales price and meets the VA’s Minimum Property Requirements. A home inspection is a more in-depth evaluation of the condo’s condition, revealing issues like electrical, plumbing, or structural defects.

5. Can I use a VA loan to buy a condo for investment purposes?

Generally, no. VA loans are intended for primary residences. You must certify you’ll live in the property as your primary home. While you can rent out rooms or move later and convert the property into a rental, your initial intention must be to occupy it. If you’re looking for an investment-only property, a VA loan won’t be suitable.

6. What is the maximum VA loan limit for condos?

As of 2020, there are technically no upper loan limits for eligible borrowers with full entitlement. However, your lender will still assess your creditworthiness, income, and DTI ratio to determine how much you can borrow. Also, high-cost counties may have higher limits, but you need to qualify financially for the amount you want.

7. Are interest rates higher for VA condo loans?

In most cases, VA loan interest rates are not higher for condos. They typically remain competitive or even slightly lower than conventional rates due to the government guarantee. The interest rate you receive will depend on factors like your credit score, the lender’s policies, and current market conditions, not the property type.

8. Do I have to occupy the condo immediately after closing?

Generally, the VA requires that you occupy your condo as your primary residence within 60 days of closing. However, exemptions exist for active-duty service members who are deployed. In such cases, a spouse or dependent child can satisfy the occupancy requirement, or you can arrange a later move-in date, subject to VA and lender approval.

The Bottom Line

So, can you use a VA loan to buy a condo? Absolutely. As long as the condominium meets VA requirements and you qualify for a VA loan, there’s no reason to shy away from this option.

The benefits—no PMI, lower credit thresholds, and potentially zero down—can make condo living an attractive prospect. Just remember to confirm the condo’s VA approval status early, factor in HOA fees, and ensure you follow VA occupancy rules.

With proper planning, you’ll be well on your way to enjoying all the perks of condo ownership without sacrificing your hard-earned VA benefits.