The process of buying a home with a VA loan includes an appraisal, which is where the borrower has found a property he or she wants to buy, has negotiated with the seller and is ready to commit to purchasing. Before the VA loan amount is approved and the purchase contract is prepared, the property must be reviewed by a VA fee appraiser.
This review, the appraisal, is necessary to assign the fair market value to the property--which helps establish the VA loan amount--and to insure the property meets VA minimum property requirements. In the event that a home does not meet these requirements, the VA appraiser will either recommend corrections or reject the property for a VA loan depending on the nature of the problem or issue noted in the appraisal.
Some VA minimum property requirements are not grounds for rejection of a VA loan application. For example, peeling paint is an issue that must be corrected, but even in cases where that peeling paint is presumed to have lead contamination (such as in houses manufactured in 1978 or older) this is a simple correction requirement rather than grounds to reject the property entirely.
When the appraiser notes such conditions, they are listed in the appraisal report along with the recommended corrections. These corrections must take place before the loan closes unless otherwise stipulated by the appraiser.
VA minimum property requirements state that in general, the home must be safe, comfortable, and in good repair. “Safe” means no exposure to electrocution hazards due to improper wiring, the home is constructed according to safety codes, etc. “Comfortable” includes requirements that the heating and air conditioning (plus other systems) are adequate to service a property the size of the home they are installed in; “in good repair” includes a requirement that the roof be leak-free and that there is no excessive moisture or dampness in any area of the home. Theses are just a few examples of the VA requirements--there are many more listed in the rulebook.
A good example of how the VA MPRs work is to review the rules for water and sanitary facilities. The VA rules say each home to be purchased with a VA loan must have;
· domestic hot water
· a continuing supply of safe and potable water for drinking and other household uses, and
· sanitary facilities and a safe method of sewage disposal.
VA Minimum Property Requirements are not the only rules that govern the appraisal process. State and local building codes also apply. What passes an appraisal in one state may not pass in another due to the variance in codes and regulations. If you have a question about a specific feature or issue in a particular home, it’s best to consult a local authority first to see if that feature has been addressed by local codes. Contact the VA only after you’ve learned what state or local law says, as VA loan rules will defer to these laws in most cases.
Some conditions cannot be corrected and cause the home to be rejected for a VA mortgage. These conditions include any situation where the home is underneath high-voltage power lines, within high pressure gas pipelines, too close to mining or other industrial operations as described in the VA loan rules. In all situations where the VA appraiser rejects a property on such a basis, it will be noted in the appraisal report.