VA Loan Inspection Requirements

What Are the VA Home Inspection Requirements?

There comes a time in every home-buying process when a buyer has the opportunity to take a peek behind the curtains – literally and figuratively. After you submit an offer on the property and before you finalize the deal at the closing, you can take a long, hard look at how the home was put together and how it’s holding up, and then assess if you wish to proceed with the purchase or even negotiate your original offer.

If you’re buying a home through the VA home-loan program, understand at the outset that the VA has its own set of criteria for assessing value and condition. In fact, traditional home inspections are not mandated for a VA home-loan purchase, but they are critical for a buyer’s protection and peace of mind. What’s more, your lender will most likely advise you to order an inspection.

If you’re stuck and not sure whether to pull the lever on an inspection, read on to understand the differences between VA loan appraisal standards and a traditional home inspection.

Understanding VA Loan Appraisal vs. Inspection

In essence, VA loan appraisals and inspections are both designed to assess a home’s value, whether it’s safe and suitable for occupancy and that it meets general housing standards. There is common ground between the two assessments. For example, both aim to find the home’s fair market value, will look for major issues that could prove problematic to the new owner and consider upgrades to the property.

The chief differences between VA standards and those of conventional appraisals is that VA appraisals aim to determine a home’s value and ensure it meets the VA’s Minimum Property Requirements (MPRs). While rare, failure to meet the MPRs can prevent a buyer from purchasing a property that’s overvalued or one that would soon require repairs or renovations.

VA Minimum Property Requirements (MPRs)

The VA’s Minimum Property Requirements will ensure your property is safe to live in and a sound investment. Before your mortgage application is approved, your lender will request an appraisal be performed by an independent appraiser, who will ensure it meets the basic requirements. The appraiser will consider a number of criteria from top to bottom on the inside and outside, from how water drains off the property to the structural integrity of the buildings.

Environmental and Geological Concerns

A VA appraiser will look for issues with geological or soil instability, subsidence, sinkholes, flood hazards, water drainage, and more, reporting any signs of instability that could cause problems. Warning signs could include cracks in terrain, water ponding, radon gas, foundation damage or issues with settlement.

Zoning and Local Compliance

To gain loan approval, a property must comply with all applicable zoning ordinances such as local housing and planning code enforcement and rules for non-residential use.

Utilities and Facilities

All properties must have access to safe drinking water, electricity, sewer, and gas. Additionally, there must be a continuous supply of safe, potable water for drinking and hot water for bathing and other uses. Properties must also have appropriate sanitary facilities and safe methods for sewage disposal. A property with an individual water supply (well, cistern, holding tank, etc.) can meet the MPRs with a filtration system or mechanical chlorinator. Some individual sewage disposal systems do comply with VA MPRs, as do some shared wells and shared sewage disposal systems.

Building and Structural Integrity

The appraiser will do a thorough review of the property’s building and structural integrity, looking for hazards, defects and breakdowns in the mechanical systems, heating, leased mechanical systems and equipment, alternative energy (solar) equipment, roofing system, attics, crawl spaces, and basements. Spaces must be accessible, free from debris and moisture, have proper ventilation, and be free of pest damage, dry rot, mold, mildew, or other issues that could put an occupant in harm’s way.

Safety and Health Concerns

Some health and safety concerns may not be as obvious as others, or unique to a property. For example, if a home has an in-ground swimming pool, the appraiser will assess its condition and ensure it’s in good working order. Burglar bars on windows must have quick-release mechanisms on at least one window that allow for a quick escape during a fire or other emergency. If a home was built before 1978, it may have lead-based paint, which could cause other issues. The presence of wood destroying insects, fungus, or dry rot could jeopardize the structural integrity of the home and trigger the need for repairs and restorative action.

Access and Easements

A property’s location and its proximity to nearby hazards will have some bearing on whether it’s backed by the VA. For example, a property can’t be within 100 feet from the nearest boundary of a high-voltage electric transmission line easement or a high-pressure gas or liquid petroleum pipeline easement. A property located within 300 feet of an above-ground or subsurface storage tank used for flammable or explosive materials may also be reported. A location that’s too close to an airport will also raise a red flag due to noise and light pollution and the increased possibility of a major accident. In short, location as well as property conditions will be considered before the property earns approval.

Real Estate and Property Rights

There are a number of other categories that will be used to determine if the home is up to MPR standards. For example, every property must be a residential dwelling (with up to four units). Additionally, while there are no minimums for size and square footage, it must be large enough for “comfortable use” and have dedicated spaces for cooking, eating, living, sleeping, etc.d In short, the inspector will ensure that the house can meet your family’s needs.

What Happens if a Home Fails VA MPRs?

So, what happens if the home of your dreams doesn’t measure up to the VA’s MPRs? First, you have the option of canceling the sale. If you want to continue, understand that the VA will not guarantee a loan that doesn’t comply with the MPRs. However, there is still hope. For starters, if the seller agrees to make repairs and/or modifications that bring the property into compliance with the MPRs, it can be newly appraised.

You could also request an MPR waiver. This request must be approved by both the VA and the lender and meet certain stipulations.

Why Home Inspections are Crucial Despite No VA Mandate

While there is a great deal of overlap in the checklists of a VA appraiser and a home inspector, there are some differences, and those are important in determining if you’re making a solid investment. Think of it this way: A home appraiser works to protect the investment of the lender, while an inspector’s mission is to protect you and your family. To that end, a home inspector will do a more thorough assessment, making sure the building is up to local codes and safe to occupy. They’ll dig deep into structural issues, and make sure there are no hidden problems that could put you in danger or cost you a fortune down the road. Their list typically includes reviews of the plumbing and electrical systems, fireplace and chimney, appliances, home energy, heating and cooling systems, the roof, and much more. In fact, they cover so much that chances are good that your lender will insist and maybe require that you hire an inspector.

The Importance of Hiring a Qualified Home Inspector

When you set out to hire a home inspector, take the time to review their qualifications and make sure they are experienced. Look for inspectors with certifications from the International Association of Certified Home Inspectors or the American Society of Home Inspectors. Check online reviews from past clients, or ask for your realtor for the names of inspectors they have worked with.

Maximizing Your VA Loan Benefits

Throughout the process of buying your home, try to remember that appraisals and inspections both serve the buyer by assessing the true value of the home and taking a hard look to uncover any potentially costly problems. A discovery may even sway you from your decision to buy the house. But if all goes well, by the time you sit down at the closing table you will have a thorough understanding of any potential complications that you’ll face in the weeks, months or years to come and have the peace of mind that comes with a sound investment using your VA loan benefits.