VA appraisals VA requirements

VA Loans and Home Inspections

January 17, 2013

VA Loans and Home Inspections

There are two very important parts of the VA home loan process borrowers should know about. One is mandatory, one is optional, but both should definitely happen in spite of the associated costs involved.

Some VA loan applicants don’t realize that the mandatory VA appraisal, which is where a VA approved professional evaluates the property for compliance with basic VA minimum property requirements and establishes a fair market value for the home, is NOT considered a “property inspection”. It’s easy to get the wrong idea about the nature of a VA appraisal because many people use the words “appraisal” and “inspection” interchangeably. These two processes, however, are NOT the same.

The appraisal is not a guarantee by the VA that the home is defect-free. When a VA appraiser reviews a home, he or she is required to examine it for the following:

“Conditions which impair the safety, sanitation, or structural soundness of the dwelling will cause the property to be unacceptable until the defects or conditions have been remedied and the probability of further damage eliminated.  Such conditions include but are not limited to

•    Defective construction
•    Poor workmanship
•    Evidence of continuing settlement
•    Excessive dampness
•    Leakage
•    Decay, and
•    Termites.”

That is a direct quote from VA Pamphlet 26-7, which sets the rules for VA home loans. VA is quick to point out that its appraisers are not experts on roof issues, plumbing intricacies, foundation problems or other things that might escape detection unless the person looking is trained to spot these problems beyond what is apparent in a walk-through of the property.

A home inspection is what the phrase implies–a much closer look at the properties including the roof for problems, poor workmanship, wear and tear or other issues that a new owner might need to be aware of before committing to purchase the property. The home inspection should give the borrower a very good idea as to the actual condition of the home; it helps you make an informed decision about whether to buy or not.

Yes, the borrower must pay for both the mandatory appraisal and the optional inspection. But this investment can save you decades of grief later on, regardless of whether you choose to buy the property or not. It’s money definitely well spent.

Do you have questions about VA home loans? Ask us in the comments section.

 

4 Comments
  1. Marshall Crutchfield

    Can anyone tell me where I can find up-to-date (2013) information of VA home loan funding fee and if it is tax deductable? Thank you

    • Joe Wallace

      Current VA loan funding fee information is located at http://www.benefits.va.gov/homeloans/circulars/26_11_19.pdf The tax deduction issue is something you should discuss with a tax professional--we limit our advice to areas that apply directly to VA loans and refinancing loans.

  2. Rich Duncan

    Can anyone tell me if a VA loan requires that the outside walls of my garage be drywalled on the inside of the garage? We are selling our home to a couple who is getting a VA loan and our realtor suggested we may have to put sheet rock on the 3 outside walls of our unheated garage to qualify our home for the buyer's loan. Our home was built in 2006 to current code standards. Is this a requirement for a VA loan approval? Thanks.

    • Joe Wallace

      That may depend on building code--VA minimum property requirements don't specify but state or local code may have changed since your home was built in 2006. Or there may be other concerns, but bottom line, could be a variety of non-VA loan rule related reasons why that may or may not be true.

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