VA appraisal requirements and home inspection process | 2022
Veteran home shoppers know they’d need to qualify, as a borrower, for a VA home loan. But did you know the home you’re buying has to qualify for the loan, too?
It’s true: the Department of Veterans Affairs won’t back a loan for just any home. To qualify for the VA loan program, a home must:
- Meet the VA’s Minimum Property Requirements
- Have an appraised value that meets or exceeds the loan amount
Before insuring your loan, the VA will make sure the home you’re buying meets these requirements by completing the VA appraisal process.
What is the VA appraisal process?
The VA wants veterans and active-duty service members to buy homes that are safe, sound, and suitable for modern life.
The VA appraisal process checks out homes before they’re financed, making sure they meet the VA’s standards.
Much like a standard appraisal, the VA mortgage appraisal has two components:
- A valuation: The VA appraiser will assess the value of the home you’re buying, comparing it to similar homes in the area. This home appraisal will show whether the home holds enough value to secure your loan amount
- An inspection: The VA won’t conduct a thorough home inspection, but it will make sure the home is in good condition and is free of dangers such as dry rot, radon, and infestations
Failing either standard will derail your loan process, at least for a while.
Step-by-step appraisal process
The VA appraisal process begins when you’ve found the right home, gone under contract with the seller, and applied for a mortgage with a VA-authorized lender.
- Your loan officer will order the VA appraisal and schedule the appraiser’s visit to the property
- The appraiser will assess the home’s value and check the home’s condition to make sure it meets the VA’s Minimum Property Requirements (MPRs)
- Your loan officer will receive a report, including a notice of valuation, from the appraiser
- If the home holds enough value to justify the loan amount, and if it meets all MPRs, the appraisal process is complete and your loan can continue
- If the home fails to meet MPRs but you want to proceed with the loan, the appraiser will have to visit again, once updates have been completed, before signing off on the loan
Modern, well-maintained houses that are priced at or below market value often sail through the VA appraisal process.
However, the appraisal could uncover problems that would complicate your loan.
Common VA appraisal problems
Since the VA appraisal process covers two main areas, common problems with your VA appraisal will fall into two basic categories:
- Problems with the home valuation: The VA’s appraisal report could come back with a valuation that does not justify your loan amount. This is a problem because your VA lender can’t approve a loan that exceeds the value of the home you’re buying.
- Problems meeting the VA’s Minimum Property Requirements: The VA home appraiser will check out the home’s mechanical systems and structural integrity, checking whether the home meets the VA’s Minimum Property Requirements, or MPRs. We’ll explore MPRs in detail below.
If the home you’re buying fails to meet these VA appraisal requirements, you’ll need to make some changes if you want to continue your VA loan process.
To get back on track with your loan, you’ll need to address the problems with the home you’re trying to get financed — or you may want to find a different home to buy.
How to handle problems with your VA appraisal
You can resolve problems with your VA appraisal. Your approach should depend on the specific problem you’re facing:
Problems with the home valuation
A VA loan can finance up to 100% of the home’s value. This is generous compared to most mortgages: an FHA loan won’t finance more than 96.5%, and a conventional loan won’t surpass 97% of the home’s value.
But even the VA won’t go past 100% loan-to-value (LTV) to cover the purchase price of your home.
If your home appraisal comes in lower than your loan amount, you can address this problem by:
- Asking for a reconsideration of value: A reconsideration of value is an appraisal do-over. This could work, but unless you have some new comparable sales to share, the appraiser will likely arrive at the same valuation the second time around, and that wouldn’t solve your problem.
- Asking the homeowner to drop the sales price: The homeowner may be willing to knock a few thousand dollars off to keep your loan process sailing along. Don’t expect much if you’re competing in a hot market against home buyers with cash offers or huge down payments.
- Making a down payment: Can you cover the difference between your home’s valuation and its sales price? If so, your lender will consider this a down payment, and it should get your loan process back on track.
- Choosing a different home: If all else fails, you may need to start looking at homes again.
Some borrowers who hit snags with their notice of value may be tempted to start their entire loan process over with another VA lender. But this likely won’t help because the appraisal will follow you to a new lender, assuming you’re trying to buy the same property.
Problems with the home’s structure or mechanical systems
The VA home appraisal is not a home inspection. In other words, the VA appraiser will not inspect the home from the chimney tops to the footings, the way a private home inspector should.
But the VA does want to make sure veterans buy move-in-ready homes with the basics of modern life: hot water supply, sewage disposal, enough space, safe-to-breathe air, and protection from the elements.
When a home misses the mark with one or more of the VA’s Minimum Property Requirements, or MPRs, you’ll need to:
- Ask the owner to fix the problems: Sometimes a home’s problems are minor. Lead paint can be remediated, a roof can be patched, and a window can be replaced. If the owner fixes the problems and the VA appraiser approves, you’re back on track. This is the most common solution for appraisal problems.
- Ask for seller concessions: Bigger problems, such as replacing dangerous electrical wiring or upgrading the leaky plumbing, may take too long to fix. In this case, ask the homeowner to deduct the cost of the repairs from the home’s sales price. The money can go into escrow at closing, and you can make the repairs after completing the purchase.
- Look for another home: When you can’t agree on a solution with the homeowner, it may be time to start shopping for another home to buy.
In addition to the VA home appraisal’s MPR check, homebuyers should also get their own private home inspection before buying the home.
In fact, it’s smart to get your own home inspection before the VA appraisal. That way you’ll know sooner whether to proceed with the home.
What is a VA home inspection?
While not required for a VA loan, a VA home inspection provides a complete top-to-bottom review of a property so you can make a fully informed decision before purchasing a home.
By contrast, a VA appraisal is required to qualify for a VA loan. A VA appraiser evaluates the property on behalf of the lender to make sure it meets two conditions, as we’ve already discussed.
One, that it’s worth at least what you’re agreeing to pay for it. Two, that the property meets VA and lender guidelines. If a home doesn’t pass the VA appraisal, then the loan won’t go through.
What’s the difference between a VA appraisal and a VA home inspection?
The VA appraisal and a VA home inspection are easy to confuse, so let’s go into a little more detail about each process.
A VA appraisal is intended to protect the borrower from buying a property that is not safe, sound, or sanitary — and to establish a fair market value of the property.
The appraisal evaluates the property according to the VA’s Minimum Property Requirements (MPRs). Your VA appraiser won’t be trained (or obligated) to report every potential problem or recommend repairs.
By contrast, a VA home inspection is a top-to-bottom examination of the home. It’s not required to move forward with the mortgage process, but it’s strongly recommended. An inspection evaluates elements of the home not covered by the VA appraiser, such as a full roof inspection and potential plumbing problems.
Who pays VA home inspection and VA appraisal fees?
The home buyer is responsible for paying for both the VA appraisal fee and the home inspection.
Home inspection costs will vary by location but often fall within the range of $300 to $500, depending on the size of the home. Typically, buyers pay this fee before closing instead of lumping it into closing costs.
The VA appraisal fee could range from $500 to $1,000 for a single-family home. The price varies by location, with variations even within the same state.
For example, a VA home buyer in high-demand Alpine County, CA would pay $1,000 for an appraisal while a buyer in Mariposa County would pay only $750.
You may not see this cost as many lenders bundle it into your closing costs. But if you back out of the home purchase after the appraisal, you’ll likely be billed for it.
VA appraisal timeline: How long does it take?
Wait times for VA appraisals vary by location with longer waits in housing markets with higher demands on appraisers.
Expect to wait at least seven business days — and possibly as many as 21 — before you get your notice of value and MPR assessment back from the VA.
This appraisal waiting period is another reason why many buyers like to get their own private home inspection before getting the VA-required home appraisal. That way they don’t have to wait for the VA to determine whether they should proceed with the home loan.
To find the fee and waiting time for your county, check out the pdfs linked from this page at va.gov.
Remember: You won’t need a VA appraisal if you’re getting a streamline refinance, also known as an Interest Rate Reduction Refinancing Loan (IRRRL) because the VA has already approved your home. But you would need an appraisal to close a VA cash-out refinance.
If time is a factor, ask your lender about the possibility of ordering the appraisal on a rush. An additional fee will most likely apply.
VA home inspection checklist
While there may be some overlap in what a home inspection and VA appraisal covers, a home inspection should provide homebuyers with a holistic look at the quality of the entire home.
The main items your home inspection should cover:
- Home structure. The construction of the home is sound, including walls, floors, foundation, roof, and ceilings
- Home exterior. Determine the life of the siding, windows and trim, plus inspect exterior lighting and other exterior features like fences. Also, the property has proper drainage based on the grade and elevation as well as landscaping
- Plumbing. Identify the pipe materials and confirm that everything is up to current standards. Also, inspect toilets, showers, sinks, and faucets for leaks and other needed repairs
- Home systems. These include chimney and fireplaces, water heaters, furnaces, air conditioning units, and septic systems if applicable
- Roof and attic. In addition to inspecting the construction of the roof, your home inspector should check the framing, flashing and gutters, insulation, and ventilation
- Electrical. Determine the type of wiring and that it’s properly grounded. Inspect ceiling fans, light fixtures, and the main electrical breaker
- Appliances. Evaluate the condition of dishwashers, ranges, built-in microwaves, garbage disposals, smoke detectors, and any other relevant small appliances in the home
Make sure the home inspector you hire guarantees the work. That way, if you discover a problem with the home later on, you have some recourse. Many home inspection companies will pay for repairs on items they should have caught.
How to find a home inspector
While a home inspection is not mandatory, it’s a good idea for homebuyers to have an inspector evaluate existing and potential problems with a property, and to offer an emotionally objective assessment of the home.
Not all home inspectors are equal though. Different home inspectors provide varying levels of service. Here are some suggestions for finding a home inspector:
- Ask for recommendations. Your real estate agent or loan officer will be able to offer home inspector recommendations. Also, check with family and friends who have recently purchased homes
- Check with trade groups. Organizations like the American Society of Home Inspectors and the National Association of Home Inspectors have lists of local members. These organizations require certifications for membership, which helps maintain a high standard of service
- Check qualifications. Licensing requirements vary from state to state. Ask your real estate agent about state requirements and make sure your home inspector meets them
- Request a sample inspection report. This can tell you a lot about an inspector’s level of experience. Look to make sure the report is clear and that it includes images of any identified problems. It should include recommendations for potential homebuyers
- Ask about fees. Home inspection costs can vary depending on the provider, the size of the home, and location. According to the U.S. Department of Housing and Urban Development, a home inspection commonly ranges from $300 to $500
What are the VA Minimum Property Requirements?
MPRs exist to ensure that a home is safe, sanitary, and structurally sound. Also, to determine that it meets local standards for a permanent home and, if it’s a new home, that it meets local building codes and HUD requirements.
A home that meets the VA MPRs may still have existing or potential problems. This is why home buyers are strongly advised to have a home inspection, and not rely only on the VA appraisal, when making a home purchase.
In fact, many VA homebuyers begin with a home inspection for an in-depth look at the property. If satisfied by the inspection, then they have the lender order a VA appraisal. The loan team will send a request to the VA who will assign an independent appraiser in your area.
Read More: VA Minimum Property Requirements
VA appraisal checklist
Some of the most basic MPRs are unlikely to be an issue, since homebuyers are unlikely to want to move forward with homes that don’t have adequate space for living, sleeping, cooking and dining, or sanitary facilities.
The VA MPRs cover more than just those basics, though. Some of the other amenities covered:
Heating and electricity
- Homes with a wood-burning stove must also have a backup heating system that can sustain the home at a temperature of 50 degrees (above the temperature point at which pipes can freeze, burst, and flood the home)
- Solar systems that heat the home or heat water must be backed up by conventional methods
- The home must have electricity in all areas for lighting and equipment
- The home must have a water heater, safe drinking water, and a working septic system (whether it is public or private)
- Homes with a well (instead of community or public water) will require a water quality analysis to ensure that the water is safe to drink
- Homes on a community well are required to prove that the community system can provide sufficient water for the homes served, and that water can be delivered at a reasonable cost on an ongoing basis
Roof and crawl space
- The roof must not leak and must have viable life left. If there is any question about the roof, the VA underwriter may require a roof inspection (separate from a home inspection or appraisal) to determine the number of years of life left for the roof
- Any crawl spaces must be accessible, clear of debris, and properly vented. Likewise, the attic must be vented
Utilities and multi-unit homes
- For 2- to 4-unit homes, the VA appraiser will determine whether laundry and storage can be shared between the units
- Water, gas, sewer, and electricity may be shared by multiple units under the same VA loan, as long as there are separate shutoffs for each unit
- Appraisals for multi-unit properties take longer and cost more
Access to the home
- The home must be accessible by foot or car from a public or private street and the access must be viable all year-round
- For multi-unit properties, each unit must be accessible without trespassing through another unit or property
Defects and deterioration
- The property must be free of defective construction or decay. The VA appraiser will also evaluate the home for any evidence of wood-destroying insects like termites, which can cause expensive damage to the foundation
- In homes built prior to 1978, it’s likely the house includes lead-based paint. The VA appraiser will likely request paint repairs, particularly for any chipping or peeling (both of which can present a lead-poisoning hazard)
Location of the home
- A VA appraiser will also evaluate the home’s geographical location, as homes located on a gas or petroleum pipeline easement may not be eligible for VA financing
- There are similar restrictions for homes too close to high-voltage electric lines
- Manufactured homes must meet all the MPRs for standard homes along with some specific, additional requirements
- The home must be permanently affixed to a foundation, and, based on the geographical location, may require special bindings to resist hurricanes and earthquakes
- Manufactured homes will likely also be required to have a permanent skirting (a continuous metal or wood enclosure around the foundation) and a vapor barrier (a continuous plastic covering over exposed earth in a crawl space)
VA appraisal requirement FAQs
What are the VA appraisal requirements?
Veteran home buyers need to meet their VA lender’s credit score minimum to get approved for a loan. But the homes they’re buying have to make the grade, too. The VA appraisal requires the home to be valuable enough to justify the loan size and to meet the VA’s Minimum Property Requirements, or MPRs.
Who orders the VA appraisal?
Your VA loan officer will order the VA appraisal. Depending on where you’re buying, the VA appraiser may need several weeks to turn around your appraisal report.
Do VA loans require an appraisal?
Yes, any new VA loan besides the VA streamline refinance (IRRRL) loan will require an appraisal to determine the home’s quality and value.
Does a VA IRRRL require an appraisal?
No, the Interest Rate Reduction Refinance Loan, or IRRRL, should not require an appraisal because these loans refinance only existing VA loans. When you already have a VA loan on your property, the VA can check the last appraisal. However, a VA cash-out refi will require an appraisal even if you already have a VA loan because the VA will need a new valuation to justify the cash back you’re getting.
What will not pass a VA appraisal?
A home will not pass the VA appraisal if it fails to meet the VA’s Minimum Property Requirements. Also, the home won’t pass if the appraiser values the home below the loan amount you need to buy the home.
Does a low VA appraisal stay with the property?
Unlike FHA loan appraisals, a VA appraisal and its notice of value will not stay attached to the property itself. But the appraisal will apply to you, the borrower, even if you switch lenders, for six months. For this reason, you couldn’t switch VA lenders because you weren’t happy with the appraisal. You can, however, choose a different home to buy.
How many days does a VA appraiser have to complete the appraisal?
VA appraisal turn times vary by county. They range from seven to 20 days with longer wait times in counties where lots of homes are bought and sold. Wait times have been longer during the COVID-19 pandemic.
Can I use the same appraiser that did an appraisal for me before?
No. Borrowers have no control over which VA appraiser visits the property.
Are VA appraisers harder on appraisals than conventional loan appraisers?
VA appraisers and conventional loan appraisers usually return similar valuations for real estate. Both appraisers base their valuations on recent, comparable sales in the neighborhood or ZIP code. But unlike conventional loan appraisers, VA appraisers have an extra duty: Making sure the home meets the VA’s Minimum Property Requirements.