VA guidelines

Properties Eligible for VA Appraisal: New Construction and Under Construction

September 28, 2010

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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.

3 Comments
  1. [...] This post was mentioned on Twitter by Army OneSource, VALoans.com. VALoans.com said: What makes a new construction property eligible for a VA appraisal? Answers here. http://ow.ly/2Lmco [...]

  2. Ullanda Berry

    My home has not been built yet, I am waiting on the VA Appraisal for my house which has not been built yet. I wanted to know was it neccessary to have a engineered, stampled and signed copy of the blueprints for the appraisor to do the appraisal? I have the blue prints, the plot survery, the electrical, and the foundation however; the people who engineered my blueprints will not release the engineered copy of my plans until payment is received. I thought that they can still appraise the property and it has no effect on the value whether they were engineered or stamped the blue print until you go to close on the property being constructed. I thought that they should still be able to determine the proper value of the home based on the proposed blueprints and compariables in the area.

    • Joe Wallace

      Chapter 10 of the VA Lender's Handbook states that for proposed or under construction properties, a construction exhibit is require that includes the following: "A certification signed and dated by a technically qualified and properly identified individual (such as, builder, architect, engineer, etc.) which states, “I certify that the construction exhibits for (identification of the property by house type, lot, block, subdivision name, etc.) meet all local code requirements and are in substantial conformity with VA Minimum Property Requirements, including the energy conservation standards of the 1992 Council of American Building Officials’ Model Energy Code and the requirement for lead-free water piping.” VA will accept HUD Form 92541, Builder’s Certification of Plans, Specifications and Site, in lieu of this certification.”

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