If you’re a veteran or an active-duty service member looking to buy a home, it’s worth exploring the VA home loan program. It’s important to note, however, that not all properties are eligible for VA home loans in the Seattle area.
Why Properties Don’t Qualify for VA Financing
A VA home loan offers unique advantages, but it also comes with specific guidelines that properties must meet to be eligible. Here are some common reasons why a VA loan appraisal may be denied:
A VA appraiser will assess the property to ensure it meets the minimum property requirements (MPRs) set by the Department of Veterans Affairs (VA). The MPRs aim to guarantee the safety and habitability of the residence. Common issues that can prevent a home from passing a VA appraisal are: bad roof, peeling exterior paint, rotten wood on decks and stairways, water in the basement, foundation problems, faulty electrical systems, etc. In other words, the home must be in good livable condition and cannot be a “fixer-upper” property.
Health and Safety Concerns
The VA appraiser will also check for health and safety issues like lead-based paint, mold, or pest infestations. If these issues are present and cannot be resolved before closing, it can result in the VA loan being denied.
If the purchase price is higher than the appraised value, it may trigger a denial or demand renegotiations. VA house loans require the property’s appraised value to equal or exceed the purchase price. In some cases, the VA appraiser will give the real estate agents involved in the transaction an opportunity to submit additional data to support the purchase price before the final VA appraisal value is determined.
Private Road Access
Properties not accessible by a public or maintained private road may not meet VA loan requirements. The road to the property must be in suitable condition and accessible year-round.
Shared Well and Septic Systems
In rural or semi-rural areas, many properties rely on shared wells and septic systems. VA loans have specific requirements for these systems to ensure the water quality and sewage disposal meet safety standards.
What to Do If the Property You Want to Buy Is Denied for a VA Loan
Being denied a VA home loan because the property failed the VA appraisal can be disheartening, but it’s not the end of the road. You may be able to try one of the following:
- Address Any Fixable Issues: If the property failed to meet the minimum property requirements or has health and safety issues, you can work with the seller to make the necessary repairs or modifications. Once the problems are resolved, the VA appraiser can reevaluate the property.
- Renegotiate the Purchase Price: If the VA appraisal comes in lower than the purchase price, you can negotiate with the seller to lower the price and/or bring in additional cash to make up the difference.
- Consider Other Financing Options: If your dream home does not meet the VA loan requirements, you may want to explore other avenues, such as a conventional loan program that may have different property eligibility criteria.
VA home loans offer incredible benefits, but not all properties qualify for VA financing. The VA appraisal process is in place to ensure that homes purchased with VA house loans meet specific standards for safety and habitability.
If your desired property doesn’t qualify, there are options available to address the issues and potentially secure your VA house loan. Whether it involves addressing property concerns, renegotiating the purchase price, or exploring other financing options, it’s crucial to navigate the process with patience and determination to achieve your homeownership goals. VA loans are a valuable resource, and understanding the appraisal process is essential to maximize this opportunity.
Schedule a Free VA Loan Consultation Today
Want to see if you qualify for a VA home loan in the Seattle area? Turn to Best Mortgage®. A local, family-owned lender, we have been serving veterans and active-duty service members for more than four decades. Complete our contact form or call (425) 649-6000 to get started.