What is VA Approval?
Is this condo VA approved?
It’s a question we get all the time here at CAP Management. We are known for our FHA approval services, but to date have not been asked to file any VA approval/certification applications. This blog explores what “VA approval” is and what it means for condominiums.
Often, lenders and real estate agents will ask the questions as a pair. Is __ (insert condo name) FHA approved? Is it VA approved? CAP Management agents can always answer the question on the FHA certification status of the HOAs we manage because our boards often would like to have their communities FHA approved and we provide FHA certification services. FHA approval for a HOA makes buying a home in that community much easier for first time buyers and other money-sensitive buyers because it minimizes risk. The Federal Housing Administration (FHA) achieves this by providing an insurance on the mortgage rates of homes sold in qualifying properties. This ensures interest rates will be predictable and reliable and not blow-up making the purchased home no longer affordable. Based on this knowledge, we can at first thought imagine that VA approval is something similar.
First, what does VA stand for? In this instance, “VA” stands for Veterans Affairs, as in the U.S. Department of Veterans Affairs. The VA has an agency called the Veterans Benefit Administration (VBA) which administers the Department’s assistance programs. One such program is their Loan Guaranty Program where ‘VA loans’ are offered.
A VA loan is a mortgage loan that has the same intentions, it would seem, as FHA loans. Specifically, VA loans are intended to make housing affordable for U.S. veterans or their surviving spouses. Affordability is achieved by providing financing where private financing is not readily available and by ensuring a $0 down payment. Because VA loans are for use where credit/financing is unavailable, they are typically provided in rural areas or in small towns away from metropolitan areas. This is one major difference between a FHA loan and a VA loan, and is likely a reason we do not come across too many of these at CAP (we do business with urban and suburban HOAs in the Denver metro area).
But what about the questions about VA approval? It does not appear that entire condominium complexes or other HOAs are approved/certified by the VA like you would find with FHA certification. Instead, individuals take out loans from certified lenders. The VA does, however, acquire properties as a result of terminations on VA-guaranteed and VA-financed loans, but entire communities are not covered by some umbrella designation.
Hopefully that clears up any confusion surrounding the topic! Researching for this blog has done so on our end. Thanks for reading!