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One of the requirements for being approved for a VA loan is a property appraisal. If you don’t know what an appraisal is, how it works or what this process means for you, read on.

What Is a VA Appraisal?

A VA appraisal is just an appraisal performed by someone certified through the U.S. Department of Veterans Affairs.

An appraisal is simply a valuation of how much the home you’re trying to buy or refinance is actually worth. This value is established by looking at the house and comparing the asking price to recent sales prices for similar properties in the area. For example, three-bedroom ranches are compared to other three-bedroom ranches, usually within a mile or two of each other. This distance can be extended in a rural area where there’s more space between similar houses.

The appraisal is important to your loan process because you want to make sure you’re not overpaying for a home. Also, your lender cannot loan more than the home is worth.

In addition to assigning a value to the home, the appraisal checks for basic safety and livability conditions. We’ll get into that in a minute.

When Will You Need a VA Appraisal?

You’ll need an appraisal for most VA loans and many of the VA refinance options, but there are exceptions. One

You’ll need an appraisal for all purchase loans to establish a value for the property. The same is true for many of the VA refinance options. The exception is the VA Streamline refinance loan.

You may see a VA Streamline referred to as an interest rate reduction refinance loan (or IRRRL, pronounced “Earl.”) If you’re trying to lower your interest rate or change your term, you may qualify for this loan option. In some cases, it’s possible to skip the appraisal on an IRRRL. This option may also be helpful if you owe more on the home than it’s worth. You can refinance up to 120% of the home’s value with this option.

The Appraisal Process

Once you begin the VA loan process, your Home Loan Expert will be able to schedule a VA-approved appraiser for you. The Department of Veterans Affairs handles the scheduling and randomly assigns an appraiser to your property. Because it’s their job to ensure that the home meets minimum requirements set by the VA, appraisers must also guarantee that the home is safe and habitable. Typically, the appraisal is requested early in the VA loan process to ensure enough time to address any issues found during the appraisal.

Appraisal Issues and Things to Consider

Just as the VA has strict requirements for loan eligibility, it also has stringent rules for appraisers.

Appraisers must inspect the property inside and out. They are also required to select comparable homes, view the exterior of them and perform a comparative analysis. Typically, appraisers look for things like structural issues or any other problems that could impact a home purchase. The VA prefers that homes be move-in ready.

Typical issues that appraisers report include homes without an efficient and acceptable heat source. A heating system must maintain a minimum temperature of 50 degrees in the plumbing areas of the home. There must be adequate and code-approved electrical systems with all the proper fixtures. A leaky roof – or a roof that has problems – and windows that have broken or damaged frames and seals can be huge issues on an appraisal report.

Appraisers must include a location map, building perimeter sketches and photographs of either the sale property or the lot where a new home’s construction will take place. They also provide an itemized list of repairs to be completed for VA loan approval. This list also includes any corrections needed to make the property conform to regulations set by the Department of Veterans Affairs. Then, they must personally make the final-value estimate and sign their name to the report.

One big thing that’s unique to VA loans is a pest inspection, during which an inspector will check for insects that eat into wood, such as termites.

In many states, the seller is required to pay for this inspection. In certain states, the veteran can make this payment. If expenses are an issue for the seller, offering to pay for the inspection could help get your offer accepted.

Although other loan options require a pest inspection when an appraiser thinks there might be a problem, the VA requires that pest inspections be done in all but 11 states. Those states are:

  • Alaska.
  • Colorado.
  • Idaho.
  • Maine.
  • Minnesota.
  • Montana.
  • North Dakota.
  • Oregon.
  • South Dakota.
  • Wisconsin.
  • Wyoming.

In certain states, inspections are only required in certain counties.

How Much Is a VA Appraisal and Who Pays?

It’s hard to say for sure how much an appraisal will cost because it depends on where you live and the characteristics of the property. If the appraiser must travel further to get there or has to inspect multiple units, it could cost you more. That said, appraisals might range between $250 and $600.

The veteran can pay for this or negotiate for the seller to pay as part of a package of seller concessions.

An appraisal doesn’t have to be a daunting step in your effort to buy a home. To help streamline the process, make sure your Realtor is well-versed in VA property guidelines. Having an agent who shows you properties that are ultimately ineligible for a VA loan is a waste of your time. It’s also important to work with an experienced VA lender. Lenders who have dedicated VA loan experience know the ins and outs of every VA regulation and can help guide you through the home-buying process with ease. If you follow these two suggestions, and educate yourself on the appraisal process, you’ll likely be able to refinance or get into that dream home in no time.

If you’re ready to get started, you can apply online or give one of our Home Loan Experts a call at (800) 785-4788. If you have questions, you can leave them in the comments below.

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This Post Has 17 Comments

  1. Hello,

    I am currently looking at homes and looking to use my VA loan, but many of the homes in the area that I’ll be moving to are very old and need updates. How will something like an ungrounded electrical system affect my ability to buy a home with a VA loan? I understand that the VA will not cover renovation costs in the total loan amount, but will something like this prevent me from buying the home, even if we’re willing to pay out of our own pockets to correct the issues once purchased? Other common factors I’m encountering in my search are roofs that need work/to be replaced, or HVAC system needing updates.

    Thank you,
    Michelle

    1. Hi Michelle:

      There are a few scenarios that might be applicable here. Ultimately, it’s going to depend on the house and the specifics of the situation, so you want to talk to one of our Home Loan Experts. That said, I can give you a little information. If you’re paying for the repairs out-of-pocket, you may just get any necessary repairs affecting livability of the property completed before moving in. If weather or a shortage of building materials made it impractical to complete the repairs before close, you might be able to do what’s called an escrow hold back in which case part of your loan funds would be dispersed after the repairs. You would have up to six months to complete repairs. For more information, I recommend you speak with one of our Home Loan Experts by calling (888) 980-6716. They would be able to go over specifics and restrictions in much greater detail.

      Thanks,
      Kevin Graham

  2. tell Me more about eligibility for second va loan for second home. I want to buy the house across the street, renovate for elder care and rent out for now.

    1. Hi Doug:

      Unfortunately, the VA only allows these loans to be used on primary residences. We can help you look into a second home, but it’s going to be an option like a conventional loan from Fannie Mae or Freddie Mac. If you’d like to go over your potential options, you can get in touch with us by filling out this form or calling (888) 980-6716 to speak with one of our Home Loan Experts.

      Thanks,
      Kevin Graham

    1. Hi Chris:

      Costs vary with every loan. We can also build the closing costs in in a lot of cases. I’m going to recommend you start by speaking with one of our Home Loan Experts to go over your situation in more detail. You can get in touch with us at (888) 980-6716.

      Thanks,
      Kevin Graham

  3. Can I use a VA Loan at my overseas posting?

    I’m PCS for a longer stint then I planned and the housing market is rather steep here.

  4. Hi, my wife and have been trying to refinance our mortgage to lower the interest rate and our monthly mortgage payment. We have 3 buildings in our 2 acre property. One is our home residence, two is a ministry house ,where we host our speakers, third the building is where people gather to be trained and ministered . My wife and are ordained pastors. We have tried to refinanced with our local banks and have not been able to help us. How can you help in this matter, The monthly payment is being paid by direct deposit.

    1. Hi Pedro:

      I’m going to suggest you talk to one of our Home Loan Experts. It sounds like you have some mixed-use operations going on with this property and there are some special guidelines are around that. If you call (888) 980-6716, they can look into your situation and give you a more definitive answer than I can on this.

      Thanks,
      Kevin Graham

  5. Are there any closing costs the veteran buyer is not allowed to pay and will become seller’s responsibility even though contract does not call for seller to pay any closing costs for buyer?

    1. Hi Linda:

      There are no such costs. This used to be the case for repairs, but it no longer is. Those can be paid by the buyer or seller, at least under our policies. Hope this helps!

      Thanks,
      Kevin Graham

  6. My husband and I have a closing date next month..but we are having to jump through hoops to get this.. was not prepared to pay 12 months of home insurance in advance..was not prepared to have more assets that we actually keep in our bank account..we live in an apt now and after buying our home our finances will be 10x better..anyone else come anyone cross similar issues?..both my husband and I are disabled and we live on a fixed income..so it is very overwhelming

    1. Hi Alice:

      I’m going to have one of our Home Loan Experts reach out and see if we can give you some advice. Thanks for reaching out!

      Kevin Graham

  7. Hello Gilbert, I don’t see any earlier response to your question and I’m wondering if anyone from Quicken got back to you. I also would like to have a home built with a VA Loan and would like some information on the process, Thanks Gilbert or anyone else.

    1. Hi Chip! At this time Quicken Loans does not do construction loans. However, once the house is built and you’re residing in the home, we can refinance you into a conventional loan. I’ve passed your comment on to our team of mortgage experts who can discuss this in more detail with you.

  8. I am elegible for a second VA home loan. How can this be used for building a new home? The builder is a small company and can not provide financing, requiring a construction loan with permanent financing upon completion. Per local bank, this would require two separate closings and 20% down payment although credit score is approx 800. As I am getting close to retirement age, I do not want a lot of cash tied up in home equity, so a VA loan with $0 down would be ideal for my situation.

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