VA Loan Minimum Property Requirements: Are There Exceptions?
The Department of Veterans Affairs has a set of standards for all properties to be purchased with a VA-insured home loan.
The VA will not approve loans for buildings or property that doesn’t meet its Minimum Property Requirements (MPRs). For example, a home may not be approved for a VA loan if it lacks:
• domestic hot water
• a “continuing supply of safe and potable water” for drinking and household use
• sanitary facilities and safe sewage disposal.
There are other requirements connected to building codes, safe construction, high-voltage easements and more, but the bottom line is that the VA has set standards for the properties it considers acceptable for VA loans. But are these standards flexible? Can a borrower get a waiver on MPRs if needed?
In some cases the answer is yes.
A section in the VA Lender’s Guide titled “MPR Variations and Exemptions” states, “VA may agree to modify the MPRs where justified by certain conditions common to a particular geographic area or occurring on the site, or where such conditions make compliance impractical or impossible.”
This does not mean the VA will automatically overlook a known safety issue or obvious problem, but a borrower ask the VA to review a specific circumstance to consider an MPR waiver.
According to the VA, “MPR for existing construction can be waived by the VA field office if a veteran is under contract to purchase the property, and
• the veteran and lender request the exemption in writing
• the property is habitable from the standpoint of safety, structural soundness and sanitation
• VA is satisfied that the nonconformity has been fully taken into account by way of depreciation in the VA valuation.”
The key to getting a VA MPR waiver is, as you can see from the above, that the condition being waived does not negatively affect the safety or habitability of the property. Conditions that do get a VA MPR waiver may reduce the value of the property, a situation that may require the borrower to re-negotiate the sale price or pay the difference between the sale price and the approved VA loan amount out of pocket.