Properties Eligible for VA Appraisal: New Construction and Under Construction
If you want to buy a property with a VA home loan, it must first be given a VA appraisal. Before that can happen, the lender must determine whether the home meets the criteria–not every property is eligible to be given a VA appraisal to determine its fair market value. In our last post, we looked at what makes new construction and existing construction eligible for the appraisal. But what about properties which are proposed construction projects, where there has been no structure built?
VA requirements state that a proposed construction site can be appraised if that appraisal is based on “proposed construction exhibits.” Technically, that means you don’t have to have an existing structure to get the go-ahead to build the property. The VA adds a caveat, saying that the property must be inspected by HUD or the Department of Veterans Affairs during construction.
That gives the VA a chance to evaluate the project as it unfolds rather than blindly trusting the property will meet VA standards once the job is done.
These rules also apply to sites currently under construction–the VA must be able inspect during the project and view the proposed construction exhibits.
VA appraisals aren’t just for the VA loan applicant who wants to buy a new home. An appraisal may be needed for VA loans to “alter, improve or repair a property owned and occupied by the veteran as the veteran’s home.” Someone who currently has a VA mortgage and wants to refinance to do such improvements should know their property is eligible to be inspected before the work is done, but in some cases construction exhibits are required.
Those construction exhibits are usually a factor on a case-by-case basis when major work is being done. The VA doesn’t require them in every circumstance, but according to the VA, all work must be inspected.
Properties may also be inspected after being altered. VA rules say, “This usually involves a VA-guaranteed loan for refinancing purposes. No construction exhibits or inspections are generally required, if the work was completed prior to the appraisal.”
VA guidelines also state that in all cases the work must be acceptably completed before VA guaranty of the loan.