Condo living can provide a convenient and affordable alternative to renting or purchasing a single-family residence. But before you commit to buying a condo with your VA benefits, here are four key things to do:
1. Weigh the Pros and Cons of Condo Ownership
As you review your home buying options, it’s important to consider whether condo-style living matches your lifestyle as well as your ideal budget. Condos are often more affordable than single-family homes and may provide compelling on-site amenities like fitness centers, outdoor recreational areas, and pools. In addition, they typically offer lower insurance rates than private residences and are often located in coveted downtown areas. Many condos provide grounds and building maintenance that relieves owners from some of the hassles and responsibilities associated with homeownership. On one hand, this makes condominiums ideal for frequent travelers and those who are too busy, unable, or uninterested in conducting home maintenance. On the other hand, this upkeep may come at the cost of additional fees and require adherence to specific association rules and aesthetic standards.
As you choose between different condominiums, it’s also important to look into how the property is managed, what the association budget is, and how that budget is allocated. Knowing this will help you gauge the association’s level of responsiveness and their ability to solve problems in a prompt and effective way. In addition, it’s never a bad idea to meet some of your would-be neighbors and assess whether their lifestyles mesh with your own. It may not be realistic to be best friends with everyone in your condominium, but it is important that all occupants are respectful, cooperative, and aligned on key association rules.
2. Look into VA Condo Approval Standards and Statuses
In order to use your VA benefits to purchase a condo, the property must meet certain VA approval criteria. These standards are intended to protect your best interests and ensure that the condo association is a financially viable business and sound property investment. To qualify, a condominium must provide apt financial documentation and reserve a stipulated percentage of its budget for addressing maintenance issues. Furthermore, a certain percentage of the condominium must be occupied by owners, all units must be fully insured against damages, and the majority of residents must have a low payment delinquency rate, among other criteria.
You can browse a list of VA approved condos on the Department of Veteran Affairs website and request information from their database to get a better sense of how different properties compare. Condos that have been “accepted without conditions” are fully approved for mortgage financing. If a condo was HUD (Department of Housing and Urban Development) approved before December 2009, it may automatically qualify for VA mortgage financing without requiring additional VA approval. Inquiring about the approval status of potential condo units will help you narrow down your search and determine the best course of action moving forward.
3. Review Your VA Loan Eligibility
Along with looking into condo approval standards, don’t forget to consider your personal qualification criteria. To be eligible for a VA loan, veterans must meet certain service requirements, purchase within VA loan limits, and not exceed a stipulated debt-to-income threshold. Practicing smart credit usage and consulting a VA loan expert will help set you up for success when you decide to move ahead with purchasing a condo.
4. Know What to Do if Your Chosen Condo Is Not VA Approved
Not all condominiums will be listed in the VA’s database—but that doesn’t mean they don’t qualify. If you find that the condo you’d like to purchase isn’t VA approved, you may want to encourage the association manager to apply for VA or HUD approval. If the condo is in good condition and meets all the baseline VA requirements, the application will be approved and you’ll be eligible to use your VA benefits when purchasing the unit.Not all condo managers will be receptive to your requests to become VA approved. If your requests aren’t being heard, it helps to have a VA loan expert on your side to advocate for VA condo approval and help you review your mortgage options. If you have questions about using your VA benefits to buy a condo or would like some professional insight on your mortgage options and eligibility, schedule a free consultation with a VA loan expert.