VA Appraisal Requirements

If you are using a Veterans Affairs (VA) home loan to purchase property, it is essential that you qualify, but it is also important that the house you intend to buy qualifies for one.

A VA home appraisal is one of the final steps to accomplish in order to qualify for your VA loan. It is conducted after you have confirmed both your service and financial eligibility with your lender. Today, we will detail why these VA appraisals are so important to your mortgage approval process and what the VA’s minimum property requirements entail.

What is a VA appraisal compared to a conventional loan appraisal?

When it comes to real estate transactions, home appraisals are conducted in order to estimate a property’s value. Typically, it is the responsibility of your lender to order and schedule the appraisal, which is administered by a licensed professional. Regardless of the type of mortgage loan you are using for a home purchase, an appraisal may be required prior to your lender approving the loan.

The biggest difference between a VA appraisal versus a conventional appraisal is that a VA-approved appraiser must be used to conduct the assessment. This is why you may want to consider choosing a lender who has extensive history financing VA home loans.

Why is a VA appraisal required?

In order to close on your VA home loan, it is imperative that the home you are interested in purchasing receives an appraisal from a VA-certified appraiser. This is for two key reasons:

1. Establishes the home’s fair market value. Your lender will only approve a loan amount that is equal to the home’s appraised value, even if it is less than the seller’s initial asking purchase price. Part of the appraisal process includes comparisons to similar properties on the market or recent home sales.

2. Ensures that the house meets the VA’s minimum property requirements (MPRs). Your VA appraiser will use the list of requirements provided by the VA to guarantee that the home is structurally safe and free of health hazards. These MPRs are meant to help veterans and servicemembers avoid purchasing a house that may require extensive repairs after moving in.

Once a VA-appraiser completes their assessment of a home, you will receive their report on the findings. This will include the home’s appraised value and a list of any potential repairs that may be needed in order for the property to meet the VA MPRs.

What if the home’s VA appraised value is lower than the purchase price?

In the case that an appraised value comes back lower than the asking price, do not fret! You still have a few options at your disposal, including:

• Negotiating with the seller to bring down their initial asking price based on the VA-appraiser’s report.

• Paying the difference out-of-pocket, since your lender will approve a loan amount up to the appraised value.

• Backing out of the transaction and continuing your search for the perfect home elsewhere.

How long is the VA appraisal process timeline?

When it comes to the length of time the VA appraisal will take, the clock starts when your lender assigns a VA-appraiser to your case.

On average, you can expect the appraisal timeline to take 10 days. However, any time between one to two weeks is normal because the appraiser will need to write up their report, though the appraisal itself is typically conducted in 30 to 60 minutes.

How much does a VA appraisal cost?

On average, a typical VA appraisal will cost between $400 and $600; however, in some cases it can reach as high as $1,200. The exact cost of a VA appraisal will vary depending on the location of the home.

Who pays for VA appraisals?

It is the responsibility of the buyer to pay for the fees of a VA appraisal. These costs can often be rolled into your VA home loan closing costs or potentially negotiated with the seller; however, talk to your lender about your payment options.

VA home appraisal requirements

It is important to remember that a VA appraisal is not a home inspection. While the appraisal will determine the home’s overall value, it will not necessarily reveal every possible defect. However, your VA appraiser will assess the home’s interior and exterior with a stringent list of MPRs in mind.

If you are wondering what makes a home considered VA-approved, here is a quick checklist of the VA’s minimum property requirement categories.

VA appraisal checklist

• Is the home a residential property? The VA home loan program was created to provide veterans with a primary residence, so it is imperative that the house you plan to purchase fulfills this number one requirement.

• How much space does the home provide? There is no minimum square footage required per person, however there must be enough room for everyone in the home to live, sleep, cook, dine, and use sanitary facilities comfortably.

• Does your family have safe access? This means the appraiser will check to be sure that you have access to the home in all kinds of weather through a safe road, without needing to traverse on anyone else’s property.

• Are there signs of pests or rot? The appraiser must check to ensure there is not any evidence of termite damage or signs of fungus and dry rot.

• Is the roof stable and free of damage? VA MPRs dictate that in order for your loan to be approved, the roof must be free of leaks or weaknesses. This also means it must be reasonably durable for the foreseeable future.

• Does the home provide access to clean water and sanitation? Your appraisal will need to show that your home has ongoing access to clean water that you can use for drinking, bathing, cooking, and sanitation. You will also need to have hot water, an approved sewage system (whether it is public or private), and sufficient sanitary restrooms.

• Are there functioning heating systems? It is important that a home has heating systems in place that are able to keep plumbing at 50° F or higher and have some form of heating provided within the living space.

• Are the mechanical systems in proper, working order? Any mechanical systems you have in your new home must be in working order, and the property must have safely functioning electricity.

• Can it be confirmed that the home does not contain any evidence of lead-based paint? If the property was built before 1978, your appraiser will have to assume that lead-based paint was used and needs to check all parts of the home for its presence. Any lead-based paint found will need to be removed and repainted. If the home was built during or after 1978, they will still check the home for the presence of lead-based paint, but they will not assume it was used.

Though this checklist only covers the main categories of the VA’s minimum property requirements, it can be a great reference to keep in mind as you start searching for the home of your dreams. It is also a good idea to take a look at the full list of MPRs (see Chapter 12) as you begin your home search, so you will be able to choose properties accordingly and ask the right questions of the seller.

Remember, you can ask your lender or real estate agent questions or have them address your concerns throughout the homebuying process. Appraisals can be nerve-wracking, but once complete you will be that much closer to becoming a homeowner.