This week, new clients of mine wondered what their options were for a downtown condo that would qualify for the VA loan program. The Department of Veteran Affairs loan program is available to those military veterans and active duty personnel that have accumulated enough service time to be eligible for the favorable terms afforded by this loan program. Benefits over conventional loan programs include market interest rates, reduced down payment requirements, no monthly mortgage insurance, as well as more flexibility with debt to income ratios and closing costs.
What’s the catch? Condominium buildings must go through the VA's condo project approval process. Similar to the FHA approval process, an HOA would need to provide supporting documents verifying the eligibility of the condominium community as a whole. No longer can an individual condo owner seek VA approval if they are either refinancing or selling their condo. It's all or nothing. VA looks at things such as overall financial health of the HOA, percentage of rental units, percentage of units that are delinquent on dues, and level of insurance protection, to name a few. Currently, very few VA approved condominium buildings exist in the downtown core of Seattle. Newer condo projects in the Downtown, Belltown, Midtown and South Lake Union area especially, lack this VA approval. So it can be challenging for those wanting to use the VA loan program to find options in our already low inventory market.
One misconception is that if a condo building is FHA approved, it is also VA approved. This is not the case, as a separate approval process is needed for VA.
The Department of Veteran Affairs has a website that lenders and real estate brokers can use to verify the VA approval status of condominium communities. So if you are curious if your building or one you are considering buying qualifies, there is a way to find this out prior to putting in an offer, refinancing, or listing your condo. Currently, when looking at our on market inventory, in the Downtown area, only Continental Place, Belltown Court, and Gallery in Belltown and Veer Lofts in South Lake Union are VA approved. Not a lot of options if you are a VA loan condo buyer. It might be beneficial if you are a condo owner to contact your HOA and ask them to review the eligibility requirements to see if your building might qualify and then consider going through the process to secure the VA eligibility.
By Marco Kronen with Seattle Condo Review: A guide to Seattle Condos exclusively for buyers and sellers