Sometimes a condo just makes more sense for certain people. If you are a veteran, you may be happy to hear that you can use your VA benefits on condos. The downside is, you may be limited on the unit you purchase. The development must meet the strict VA guidelines in order to qualify.
Finding the Right Condo
When buying a condo with your VA benefit, you’ll want to focus on those developments already approved by the VA. You can find a listing in the VA database. You can search by association name or just by city and state. This will help you save time by not applying for loans on unapproved developments.
What if You Choose a Condo That Isn’t Approved?
Luckily, you do have options if you fall in love with a condo that isn’t yet approved. Where you aren’t as lucky is if you find one that was flat out denied by the VA. There’s no workaround if the development tried for approval, but didn’t receive it. There’s a reason the VA did not approve it.
If, however, the development never tried to get VA approval, you have a few options. The easiest is if the development already has HUD approval. This means that FHA and/or VA loans are allowed for the development. If the approval occurred before December 7, 2009, the VA will automatically approve the development. If the HUD approval came after that date, you’ll have to do more work.
If the development never had VA or HUD approval or the HUD approval occurred after December 7, 2009, you can ask the HOA to seek approval. Keep in mind, not all associations are willing to do so. The VA will require them to provide a lot of documents including their financials. Some HOA’s just don’t want to be bothered. Others will go through with it in order to get more buyers into the development.
Getting the Attorney Opinion Letter
A crucial part of securing VA approval for a condo is the attorney opinion letter. This is just a letter from a 3rd party that confirms that the development meets VA requirements. This is a sort of way to streamline the approval process, getting it to move along quicker.
Why the VA Cares About Condos
You might wonder why so much pressure is put on the HOA and therefore veterans to find the right development. It’s basically to protect both the lender and the veteran. Associations that put unnecessary burdens on the veterans or lenders put both at risk for a tough time in the future.
For example, some associations reserve the right to approve whether a lender starts the foreclosure process on a unit. This puts the lender in a very bad situation. If the borrower defaults long enough, the lender must start foreclosure proceedings. Requiring the HOA’s approval could lengthen the time it takes for the lender to start taking action.
Other restrictions that could affect veterans are age restrictions. Certain developments are only for those of a certain age – usually the elderly. While this might seem like a good idea, it greatly restricts how veterans can sell the condo to when the time comes. The VA will carefully go over the documents to make sure the restrictions are fair and conducive to anyone that resides there.
Start Early if You Need Approval
If you end up with a development that does not yet have approval, start early. Associations are not under any obligation to work fast to get the approval. Plus, you don’t know how backed up the VA is with other requests. The approval process could greatly slow down your mortgage process, putting your purchase contract at risk.
This is why it’s best to stick to condos that already have the VA’s seal of approval. You save the time and headaches involved in trying to get the approval. If you need to move into a new condo quickly, you’ll want one that already has approval and just requires you to prove you can afford the loan under the flexible VA guidelines.