VA Appraisal Questions and Answers
The appraisal process is critical when it’s time to purchase a home with a VA mortgage.
Without the appraisal, there can be no loan approval, so it’s good for borrowers to understand how the VA appraisal system works (and that it is not a replacement for a borrower-initiated home inspection). Here are some common questions and answers about VA appraisals you should know:
Why is a VA Appraisal Required?
The VA Lender’s Handbook, Chapter Ten states, “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 Can/Should Order My VA Appraisal?
The Department of Veterans Affairs says it prefers the lender to make appraisal reuqests, “although it can be requested by any other party to the transaction, provided the appraiser is assigned by VA.”
What Kinds of Property is Eligible for a VA Appraisal?
There are three basic classifications of property the VA will appraise, provided they meet the right criteria. One is “existing construction” which the VA defines as, “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.”
For new construction homes, the VA loan rulebook says, “Newly completed properties (completed less than one year and never owner-occupied) are eligible if either
- Covered by a one-year VA builder’s warranty
- Enrolled in a HUD-accepted ten-year insured protection plan, or
- Built by a veteran, as the general contractor, for his/her own occupancy.”
The VA adds, “An exception may be made for a veteran who wishes to purchase a new home from a builder who is not more than occasionally involved with VA financing and will not provide either a one-year VA builder’s warranty or a ten-year insured protection plan.”
The VA also has a classification for properties which are “proposed or under construction”. The rules for these types of projects includes, “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”
Will the VA Appraise a Manufactured Home or Mobile Home?
In general, VA loan rules for these properties includes the following:
“To be eligible for a VA loan term of 30 years, a manufactured home must be
- Classified and taxed as real property
- Properly affixed to a permanent foundation (Section 12.10)
- Substantially conform with VA MPRs (Chapter 12), and
- Conform with applicable building code and zoning requirements for real estate.”
This is not a complete list of answers for VA loan appraisal questions–we’ll have more to come in another blog post.
Do you have questions about VA home loans? Ask us in the comments section.