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.