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Do Homes Purchased With a VA Loan Have Warranties?

March 7, 2019

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Do Homes Purchased With a VA Loan Have Warranties?

va loanWarranties are everywhere. You can take advantage of a manufacturer’s warranty on your cell phone, your computer or even your car when buying them brand new.

Some products like cars and trucks even offer extended warranties a buyer can purchase when the car’s not brand new. It’s logical to assume the same would be true for a home purchase with a VA mortgage. But what’s the reality?

When a buyer applies for a VA loan to buy their dream home, they learn the property must first pass a VA appraisal, which helps the Department of Veterans Affairs determine if the home meets VA standards for health and safety. Then the appraiser can establish the fair market value.

Buyers might assume that their home purchase is protected by some kind of warranty, but the truth is that the VA only requires a warranty in specific instances. New construction, for example, is covered by a one-year builder’s warranty. Existing construction homes one year or older are not covered by a warranty except in certain cases.

According to VA instructions, ten-year builder’s insurance or warranties are required when the property to be purchased is a proposed or under construction AND the local authorities are not doing construction inspections.

In these cases, the VA requires a second warranty known as a one-year builder’s warranty, which must be submitted on an official VA form.

In these cases, the VA wants the buyer to understand the property has not been inspected for code compliance or other issues and requires the buyer to sign paperwork to that effect.

Warranties for typical home purchases (one year old or older) with a VA-insured home loan are the exception rather than the rule, which is why the VA urges house hunters to pay for an inspection of the property before committing to the purchase or making the purchase conditional on having the home pass a buyer-funded inspection.

2 Comments
  1. John Delmonico

    I currently have a VA loan. The home loan was 138K. My issue is very complex. I had a Bankruptcy that was discharged in Oct 2008. Since, I have reestablished my credit and my current score is 695. My home was dischargered in the BK. However, I never signed a letter of confirmation and the bank(Wells Fargo) has issued me documents that say I do not have any balance on the loan. They have let me stay in the home and I have never been late or missed any payment. Can you please let me know if I qualify for a second VA loan at this time. My job is relocating me and I am leaving my house with a buyout offer from the relocation company. However, it will not be enough to cover the balance (-8K). Please let me know as soon as you can. Thank you

    • Joe Wallace

      Hi John, thanks for asking...the complexity of your situation means that the VA will likely need to examine the facts--there's no way to say 100% for sure "yes" or no, but based on what you've said about the timing of your bankruptcy--more than two years have gone by--and your credit score, you may be able to qualify for VA refinancing. If you are asking for a second VA loan for a new home purchase, you'll need to have your eligibility restored to get a full VA loan guaranty. The VA will only restore full eligibility once the loan (in cases where the borrower is still paying the mortgage) or the indebtedness to the VA (in cases where the VA paid a claim to the lender on your loan) is repaid in full. You are entitled to use any unused eligibility you currently have for a new loan in the meantime but it would not be the full entitlement unless you've applied to the VA to have it restored. The VA also has a compromise claim system for certain cases where the home is sold but there is still a balance due...this may or may not apply in your situation, the VA and the lender will need to examine your specific case. Hope this helps!

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