Tips For Purchasing an Austin Home With Your VA Loan

One great benefit veterans who have previously served or are currently serving our country are eligible for is the Veterans Administration home loan aka a VA loan.  The VA loan allows for a zero down home loan for qualified veterans.  However, just because you served the country does not automatically qualify you for a home loan.  Although the VA does not have specific credit requirements for buyers looking to utilize the VA loan, private lenders facilitating these loans often do.  In addition, you will also have to show that you have the financial means to pay the mortgage and home insurance moving forward.  That being said, if you have a decent credit score and a debt to income ratio of 41% or less, you will likely be able to qualify for a VA home loan.

There are many benefits of the VA home loan.  The most well-known of which is the ability to purchase a home with zero money down.  However, veterans who purchase a home with a VA loan also have the benefit of no mortgage insurance (a requirement for home buyers putting less than 20% down with a conventional of FHA loan).  Additional protections for home buyers using a VA home loan include limitations on closing costs and prohibiting early payment penalties.
​
The VA home loan is designed to protect the veteran, and thus there are a variety of property specific requirements for buyers looking to purchase a home with a VA loan.  If you are shopping for a home in the Austin area, and are planning to use your VA loan it’s important to understand these requirements so you don’t waste your time looking at properties that may not be eligible to purchase with a VA loan.

Purchasing a New Construction Home with a VA Loan in Austin

If you are thinking of purchasing a new construction home with a VA loan, the builder must be registered with the VA.  If the builder is not registered with the VA, that does not necessarily mean that home is off the table.  The VA builder registration process is relatively simple, and a VA builder ID can be procured within a week in most cases.  However, the builder must be willing to go through this process.

Purchasing an Austin Condo with a VA Loan

​If you would like to purchase a condo in Austin using a VA loan, you will need to make sure the condo complex is on the VA’s approved condo list.  For a condo to be approved it must meet the following criteria:

• The complex must be at least 50% owner occupied
• No one person or entity can own more than 10% of the units
• At least 85% of owners must be current on HOA dues
• There must be more than one unit

Just because a property meets the criteria above does not automatically mean it is eligible for a VA loan.  A condo must be listed on the VA’s approved condo list.  You can view and search for VA approved Austin condo buildings on the VA’s website.

Minimum Property Requirements to look out for when shopping for an austin home to purchase using a Va Loan

Whether you are buying a new construction home, a condo or an existing home with a VA loan you will need to make sure the property meets the VA’s minimum property requirements.  These requirements are designed to protect the veteran from safety related issues as well as future economic burdens.  Here are some of the minimum property requirements to look out for while shopping for an Austin home:

1. Property Access - The home can not be land-locked.  You must be able to access the home from a public or private street.  An access easement is permitted as long as it is properly recorded.
2. Use - The VA loan is primarily a home loan.  Thus, it must be used to purchase property that is primarily residential in nature.  If a portion of the property is non-residential it may still qualify to be purchased with a VA loan so long as that portion is less than 25% of the gross floor square footage.
3. Habitable - A home must be habitable and have a bathroom, space for sleeping, and space for cooking.  Although there are not specifications for specific appliances, a home without an oven would be a red flag for potential funding problems down the line.
4. Utilities - The home must have independent utilities or have the permanent legal right to the utilities.  There is a preference for public utilities; however having a well or a septic system is generally ok so long as it is performing adequately.
5. Reasonable Future Utility - The VA guidelines often use the term of reasonable future utility for a number of different systems and structures within a home.  The idea here is that the major mechanical systems such as plumbing, electrical, HVAC will continue to operate for the foreseeable future. The roof must have at least 5 years life left.
6. Defective Conditions - A variety of defective conditions would need to be corrected in order to purchase a home with a VA loan.  These conditions can be rectified at the expense of the buyer or seller but they must be addressed prior to closing if they are identified by the appraiser/the inspector.  Defective conditions could be related to site conditions or construction defects.  In Texas, a wood destroying insect inspection must be performed by buyers using the VA loan. Signs of termite activity would e a defective condition that would need to be cured prior to closing.  Other common defects include rotting wood, broken windows, improper drainage, or broken windows.  Peeling paint in homes built prior to 1978 is automatically considered a defective condition by the VA.

This list is by no means exhaustive, but if you are looking to purchase a home in Austin using a VA loan, it should give you a basic idea of what to look out for when considering your options.  If you want to utilize your VA loan to purchase an Austin home, I’d be happy to help you navigate the process.  Contact me today so we can start working to find the perfect home to meet your needs.