VA Loans and Condos
The VA home loan program can be used for most any property type as long as the veteran will occupy the property being financed. This includes condominium homes. But even though condos are eligible for VA financing, there are some requirements issued by the VA that condos must meet.
When applying for a loan to finance a condominium, your loan file will be approved under the very same guidelines as a single family home. Most lenders require a minimum credit score of 620, you’ll need to have sufficient monthly income to qualify for the mortgage and the property must be your primary residence.
Yet at the same time, your proposed condominium must also pass additional requirements that a single family home does not. What are they?
In any condominium project, VA loans require that at least 50 percent of the condos must be owner-occupied. This means that no more than 50 percent may be rented out to non-owners. Most condos cover this requirement and is only an issue in college towns or urban areas where renting is the norm.
Condominiums require a homeowner’s association, or HOA fee. This fee can be paid monthly, quarterly or annually is included in your debt to income ratio. If more than 15 percent of the owners are more than 30 days behind with their HOA fees, the VA loan can be declined due to this delinquency.
If the project is newly constructed, at least 75 percent of the properties should be pre-sold to their owners.
Other requirements including sufficient insurance coverage, no outstanding or recent litigation and a stable management fund are required. Your VA lender will review your potential condo project for you, to see if the project can be approved. If the project has already been approved for VA financing, you can find out ahead of time by visiting the VA portal listing approved projects.