Everything You Need to Know About Eligible Home Types in the VA Loan Program

There are some home types that are not eligible for financing with a VA loan. Remember that the VA loan program is specifically for buying a home. You cannot use proceeds from a VA loan to rent a home or buy anything other than a suitable residence that meets your needs. The VA also specifies what kinds of homes it considers suitable and under what circumstances. The VA’s rules can be confusing at first, so in this article we’ll give you the information you need to know to make plans on how to use your VA loan benefits. We won’t be giving you all the information that exists, but this will be enough to start the decision-making process.

“Normal” Homes

For the most part, the stand-alone homes that exist in the suburbs or away from the city center are eligible, though they still have to meet the VA’s Minimum Property Requirements in order to actually be eligible. The MPRs are a topic for another article, but suffice it to say that if it’s a typical home you actually want, it probably meets the MPRs. Normal homes don’t have any specific MPRs that apply to them and not any other home type, so they are usually the easiest type of home to purchase with a VA loan. You’ll want to keep an eye on whether the home is part of an HOA or shared-interest community, because the VA’s willingness to finance the purchase of the home will depend on the terms of the HOA or community. If the terms are too restrictive or stringent, the VA may refuse to finance its purchase.

Condo Projects

That’s a good lead-in to the next home type we’ll be discussing: condos. Condos can be a good investment for veterans, particularly aging veterans who would rather pay a small fee to have their property maintained than do it themselves. Condos, townhomes, and other shared-interest communities are also really good for those who care less about customizing their home and more about having the value of their home not negatively affected by the state of their neighbors’ property. However, the VA is somewhat picky about financing condos, and there’s a very good reason for that. Some condo projects have limits on the ownership the veteran has over their condo and give themselves more power over the veteran than the VA is comfortable with. The VA maintains a list of approved condo project whose documentation are in line with what the VA considers appropriate. If the condo you wish to buy is not on the approved condo project list, you can submit it for approval, but if it does not get approved, you’ll need to look elsewhere if you intend to purchase with a VA loan.

Manufactured Homes

Despite some popular rumors, the VA will finance a purchase of a manufactured home – under a couple of conditions. The manufactured home must be affixed to a permanent foundation (or going to be affixed before the borrower occupies it). Also, the lot the home is on and the home itself must be classified as real estate. As long as the manufactured home meets these two requirements, then it is eligible so long as it meets the same MPRs that a normal home is required to meet. The intent here by the VA is to make sure that every veteran ends up with a home that will meet their needs, and won’t be stuck in a home that they thought was good enough but is deficient in an important way.

Other Homes

You can buy multi-unit properties of up to four residential units and one commercial unit. The caveat? You have to be occupying one of the units as your primary residence. Homes not affixed to a permanent foundation, trailers, RVs, and any rental properties will not be eligible for a VA loan. Now that you know what you can and cannot purchase with a VA loan, you can start looking for the best home for you. If you have any other questions, you can reach out to us at Low VA Rates and we’ll be happy to answer them for you.