If you are a veteran that plans to use your VA benefits to buy a condo, it works in your favor to buy a condo that already has VA approval. If it doesn’t, you have to wait as the association goes through the rigorous process of getting approved. It’s not something that can happen overnight, but if you want to buy a specific condo, it may be worth the wait.
Below we help you understand what associations must provide in order for the VA to approve the condo development.
What’s the Condo’s Status?
First, it helps to understand how the condo fits into the following VA requirements:
- How many owner-occupied properties are in the development? At least 50% of the properties must be owner-occupied in order for the VA to allow financing.
- How many homeowners are late on their association dues? If it’s more than 15% of homeowners’, the development won’t be eligible for VA financing.
- How much of the development is complete? At least three-quarters of the units must not only be complete but also sold.
- Is there any pending litigation against the association? If the answer is ‘yes,’ the VA won’t allow veterans to use VA financing on the condo.
Getting the answers to these questions first can help you determine if it’s worth moving forward. If the development doesn’t meet even one of these conditions, then it won’t qualify for VA financing.
If the development does meet the above requirements, it may be worth asking the lender to request that the association become VA approved.
What the Association Must Provide
The VA and the association handle the process of getting approved for VA financing. You don’t have to provide any documents, but it helps to know what the association must provide so that you can facilitate the process if it’s not moving fast enough.
The VA requires:
- A formal request for approval – The VA requires that the association write the request themselves. No association is required to seek VA approval. If they don’t want to be bothered or don’t want VA financing in the development for some reason, they don’t have to request it. If they want it, though, they must make it apparent so that the VA recognizes that the association has a vested interest in the process.
- Official documents – Along with the letter of request, the association must provide written proof of the bylaws and articles of incorporation. They must also provide the plat map and management agreement. Finally, they must supply at least the last two months’ worth of meeting minutes, if the association has had meetings already.
- Attorney opinion letter – The attorney opinion letter isn’t required, but it certainly can help move things along. If an attorney provides the opinion that the association is eligible for VA financing, the VA will be more likely to move the process of approval along faster.
Figuring out the Status
Once the VA has all of the required documents, they will render a decision. You may see them provide any of the following decisions:
- Unacceptable – There are one or more requirements that the association doesn’t meet, which makes them ineligible for VA approval
- Approved with conditions – If the association meets the requirements, but has yet to provide a specific document, you may see this condition. Once the association sends in the right documentation and it’s cleared, you are free to move forward with VA financing.
- Approved – If the association is approved, there is nothing you have to do except get your loan processed and to the closing table.
The VA approval process for condominiums could take some time. On an average, plan on spending 4 – 6 weeks waiting for an answer. If you don’t have that kind of time, you may want to look elsewhere, focusing on condos that are already VA approved.Click to See the Latest Mortgage Rates»