Use Your VA Home Loan Benefit To Buy A Condo


Tim Lucas
Military VA Loan editor

For any veteran of the Armed Forces, National Guard, or the Reserves granted a VA homeowner’s loan, a common question can arise – “can I use the loan to purchase a condominium instead of a traditional home?” Put simply, the answer is yes. While there are some differences that distinguish the VA loan approval process for condos, the good news is that using your VA mortgage to purchase a condo is as easy using it to purchase a single-unit home.

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VA Condo Approval Standards

To be approved by the VA, a condominium project must meet these requirements:

1. At least 50% of the units must be occupied by the owners. In other words, less than 50% of the units are rented out.
2. Less than 15% of the unit owners are behind on their HOA dues.
3. For newly constructed condos or projects recently converted from apartments, at least 75% of the units must be sold.
4. The project must consist of more than one unit.
5. No single entity (individual, investor, or company) may own more than 10% of units in the development.

If the condo complex meets these requirements, there’s a good chance it’s VA approved. However, to legally qualify for purchase with your loan, the condo must be on the VA approved condo list as well.

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Navigating the VA Approved Condos List

If you’ve decided a condo is ideal for you, your next move will be to browse all condo complexes in your area or preferred location that have been given the VA stamp of approval. It’s quite easy to look up whether a condo is approved on the VA’s approved condo list. Just go to VA’s website and type in the name of the condo complex you are hoping to purchase in. When typing it in, it is often best to use just part of the condo name and include an asterisk (*) at the end. Otherwise the website will only show exact results and your desired condo may not appear As example, let’s say you like a condo in a complex called Somerset Village East located in San Diego, California

1. Type in the first several letters of the condominium’s name, followed by a * (no space).

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2. Type in the city and select the state the condo is located in (county is typically not needed).

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3. Hit Submit

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4. You’ll get a list of all condos in San Diego starting with “Som”. In this case, only one.

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5. After clicking on the condo, you will receive relevant information such as the address and the most recent request and review dates. You will also receive a current status on whether the condo is VA approved. If it is, the status will read “Accepted Without Conditions”, “Accepted With Conditions”, or “HUD Accepted.” Otherwise, it is likely not a VA approved condo, and you may not be able to finance it with a VA loan (you can ensure only condos that fit requirements are shown by checking the box “Retrieve only approved Condos?”).

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In some cases, veterans have had luck locating VA loan approved condos with the help of a real estate agent. Often agents have access to a local Multiple Listing Service (MLS), from which they can create a list of VA approved condos for sale near you.

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VA Condo Approval Types

Above, we mentioned that a condo list on the VA website will specify current approval statuses of available condos. Let’s dig in a bit further and explain what each status means.

Accepted With Conditions

Simply, these condo projects have undergone review by the VA and are eligible for VA financing. If your prefered condo project has this status, you can be certain that your chosen condo has been determined to meet all standards for approval by VA officials. You can be sure that your VA home mortgage loan will be accepted.

HUD Accepted

Historically, the VA accepted any condo project that was approved for Federal Housing Administration (FHA) financing by the Department of Housing and Urban Development (HUD). When this was federally changed on December 7th 2009, there were a group of condos that had not been reviewed for VA approval, but were previously accepted by HUD. Because of this special circumstance, these condos were not required to go through specific VA review, and were “grandfathered” in as VA approved projects.

If a condo you are interested in is “HUD Accepted”, chances are good its VA condo approval status is also “Accepted”. However, this is not guaranteed, and it would be wise to ask your lender to check with the regional VA office before you decide on a unit in that complex.

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Unaccepted

Units in condo communities that are “unaccepted” are not eligible for VA financing. They have never gone through the VA approval process, were not grandfathered in under previous HUD acceptance, or have gone through review for approval but were denied by the VA.

What if the Condo is Not VA Approved?

If a condominium project you are excited about is not on the VA approved list, you can ask your lender to file documents for an inquiry into the property to see whether it meets approval requirements. At this point, your lender would begin negotiations with the property manager or condo association to see whether they are willing to undergo the VA approval process.

The process itself can take up to anywhere from one month to 90 days or more, depending on a variety of factors. Important to note is that, even if the property manager or association complies with an approval inquiry and accepts the paperwork, there is no guarantee that the condo will be cleared for approval at the end of the process. For this reason, if the condo isn’t already approved by VA, it’s often best to pass on it and look for another unit in a VA-approved complex. Approving a condo can take lots of time, energy, and resources, and it is generally the responsibility of the particular condo’s homeowners’ association or members board to pursue VA approval in the first place.

What’s more, while some condo projects may be unaccepted for not complying with the VA approval standards mentioned above, in other cases, there could be serious issues with living conditions or owner rights, in which case you probably don’t want to live there anyway.

Should I Buy a Condo?

Before pursuing a VA loan for a condo, you should have a clear answer to the above question. Condos offer a variety of perks, but the perks do not always fit everyone’s needs. To give you a better idea of whether a condo unit is right for you, here are some notable differences between owning a condo and owning a traditional home.

Expenses: Condos tend to have lower median sale prices than regular homes, meaning lower payments, and an overall better deal on square footage. Conversely, most VA approved condos require you to pay monthly HOA fees that may increase over time. If you are concerned about price points, you will want to calculate the overall difference before you decide.

Maintenance: One of the major pros of purchasing a condo is how easy they are to maintain. In contrast to a home, which requires interior and exterior maintenance at the hands of its owner, a condo’s HOA will take care of servicings such as landscaping, ensuring building integrity, and sometimes performing indoor repairs. This ease of upkeep often translates to peace of mind, especially for active service members.

Space: Condo units provide less space than homes, in square footage and between neighbors. Likewise, they rarely come equipped with a garage or extra storage space. For individuals who do need extra space and prefer greater proximity from others, a condo may not be the right choice.

Amenities: Condominiums often include amenities such gyms, pools or saunas, barbecues, inside and outside common areas, and more. These are some reasons why HOA fees may increase over time, but paying for access to them in a condo is far less expensive than installing them in a single home. Condos also tend to be located closer to urban centers, so those hoping to live “in town” and closer to its facilities may prefer a condo.

Community Rules: Many condo boards require owners to adhere to complex-specific guidelines. Before choosing to buy, it’s good to have a clear sense of what the community rules are to see whether you would be a good fit.

Security: For those concerned about feeling safe, condo complexes do an excellent job of securing the premises via gates, guards, and cameras.

A VA Approved Condo Can Remove Barriers To Homeownership

Condos can be a great way to own a home at a lower cost than you might expect. And your VA benefit means you can buy with no money down.

And because condos appreciate in value, you could use your future equity to move up later on in your homeownership journey.

Speak to a VA condo expert to check VA condo mortgage rates. Get prequalified so you can make an offer on the right condo when you find it.

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