VA Appraisal BasicsVA loan rules for appraisals are found in the VA Lender’s Handbook Chapter 10, which explains a great deal about the process and what’s required. VA appraisals can only be carried out for VA home loans on properties that are eligible for the loans, so only homes within the United States and its territories or protectorates. VA loans are not available for overseas homes.
Chapter 10 starts off with some of the most basic information–the purpose of the VA appraisal. “An appraisal is required to help ensure that any property which will become the security for a VA-guaranteed loan
- Has a value of at least as much as the loan amount, and
- Is in a condition acceptable to VA.”
Who is allowed to request the work of a VA assigned fee appraiser? “VA prefers that the appraisal be requested by the lender, although it can be requested by any other party to the transaction, provided the appraiser is assigned by VA. Lenders must ensure that agents and mortgage brokers requesting VA appraisals on their behalf are familiar with the requirements in this chapter.”
VA loan rules state that the lender must exercise due diligence in the appraisal process. “Ensure that the property is eligible for appraisal and all other appraisal request requirements can be satisfied (Sections 10.05 through 10.10). Contact the VA office of jurisdiction for the property if there are
- Questions about the property’s eligibility, or
- If the property is not eligible for appraisal but is already the security for a VA loan.”
Certain property types have different applicable rules for eligibility. Chapter 10 states that, “A home which has either been previously owner-occupied or had all onsite and offsite improvements fully completed for one year or more is eligible” and would be classified as “existing construction”. For homes considered Proposed or under construction”, the rules say “Property is eligible for appraisal prior to construction or during construction, if
- The appraisal is based on proposed construction exhibits, and
- The property is inspected by VA or HUD during construction”
In our next blog post we’ll cover the types of property eligible for VA appraisals and what makes them able to be appraised under the VA loan system.
Do you have questions about VA home loans? Ask us in the comments section.