VA loans

Condo Eligibility For VA Appraisal and Loan Approval

May 11, 2012


Condo Eligibility For VA Appraisal and Loan Approval

Some of the most common questions about VA condo loan approval have to do with condo project approval and appraisals of condo units. Some borrowers who want a VA guaranteed home loan for a condominium unit don’t know the VA policy when they start their search for a home–what do VA rule say about condo projects?

The very first thing a potential VA loan applicant should know is that a condo project must be “acceptable to VA before any unit in the project can be eligible for VA loan guaranty”.

That means the condo must either be on the VA approved list or be added to that list by the lender. In order for a condo project to be approved, it must meet certain standards as set by the VA.¬†Buyers should not assume a condo project is “fair game” for a VA mortgage loan until consulting with a lender or agent to see if the property is on the VA approved list or can be added to it.

With that in mind, it’s clear that buying a condo unit with a VA mortgage isn’t the same as purchasing a suburban home–the entire condo project must meet certain standards and address certain issues the suburban home owner wouldn’t need to worry about.

This is due in part to the collective nature of condo ownership. If owning a unit in the condo project or membership in the condo owner’s association means agreeing to restrictions on the sale of the condo unit, right of first refusal clauses, or other things prohibited under VA loan rules, the VA will not allow the condo project to be added to its approved list.

Condo projects that are denied VA approval can be reconsidered if the project has addressed the issues that led to the denial–for example, a condo project with the VA-prohibited right of first refusal clause can amend its bylaws or covenants to eliminate the clause. The project would then be eligible to be considered once more. (Reconsideration of a condo project is not automatic–the review process must be initiated again.)

The VA Lender’s Guide, found at the VA official site, advises borrowers and lenders alike to use caution when considering a condo project not currently on the approval list, but under consideration. “To avoid an unnecessary appraisal fee, a condominium unit should not be appraised unless there is a reasonable likelihood that VA or HUD will accept the project prior to loan closing”.

For more information on condos and planned unit development projects, contact the VA at 1-800-827-1000.

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  1. Jim

    Joe, Off-topic, but still related to VA loans. I currently own a home with a VA loan. Already cut more than a point off with an IRRRL. I'm interested in finishing the basement and rolling that into my loan with a refinance. No real equity to speak of. Is there a VA product that allows for that? Thanks, Jim

    • Joe Wallace

      Hi Jim, I'd look into an FHA 203(k) or Title I loan for those purposes. The VA has an energy-efficient mortgage program that allows add-ons during refinancing loans for approved energy efficient additions/upgrades, but finishing the basement wouldn't be included in that. More info on an FHA Title I loan is at (a private company and not a government website) and 203(K) info is at

  2. Jim

    Thanks, Joe. In the mean time, can you send me the terms your firm has for an IRRRL, e.g. rates and fees? Please use the email address I entered when commenting. Thanks again!! Jim

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