VA Appraisal: Fees, Requirements And Process
One of the requirements to be approved for a VA loan is a property appraisal. Not to be confused with a home inspection, an appraisal determines a home’s value and is necessary for securing a VA loan.
Let’s explore more on what a VA appraisal is, how it’s different from a standard appraisal and what this process means for you when taking out a VA loan.
What Is A VA Loan Appraisal?
A VA appraisal is an appraisal performed by someone certified through the U.S. Department of Veterans Affairs (VA). It’s a valuation of the property’s market value, or how much the home you’re trying to buy or refinance is actually worth. This value is established by inspecting the house and comparing it to recent sales prices for similar properties in the area.
The appraisal is important to your VA loan process for three main reasons:
- You want to make sure you’re not overpaying for a home.
- Your lender can’t loan more than the home is worth.
- The appraisal ensures that the home meets the VA’s minimum property requirements (MPRs), which involve checking for basic safety and livability.
VA Appraisal Fees
It’s hard to say exactly how much an appraisal will cost, because it depends on where you live and the characteristics of the property. If the appraiser must travel a good distance to the property or has to inspect multiple units, it could cost you more. You can pay for VA appraisal fees or negotiate with the seller to pay as part of a package of seller concessions.
Uncover the maximum fees for your state and county on the VA website. Your fee could potentially be as low as $550 or as high as $2,000 or more as of this writing, depending on your area and the characteristics of your home.
VA Appraisal Requirements Checklist
VA appraisal requirements will vary from the requirements associated with other home loans. The home must meet specific criteria put in place by the VA, and it has to be appraised by a VA appraiser. More specifically, each appraised home must meet a series of standards known as minimum property requirements (MPRs). These guidelines revolve around safety and livability and focus on the home’s electrical and plumbing systems, HVAC functionality and overall structural soundness.
VA appraisers must inspect the property inside and out, like traditional, non-VA appraisals. They’re also required to select comparable homes, view the exterior of them and perform a comparative analysis. Typically, appraisers look for any problems that could impact a home purchase. The VA prefers that homes be move-in ready.
You can view the full list of MPRs online, but we’ve outlined the major requirements below.
Your VA appraiser will check the property to ensure there’s sufficient space in your prospective home to perform normal day-to-day functions. Specifically, the home should provide bathrooms, sleeping quarters, and safe and adequate room for food preparation.
Access And Encroachments
The property needs a safe means of access to the backyard and from the street. Private streets should be maintained in accordance with some form of homeowners agreement that will not place an undue burden for maintaining the road on you. The appraiser will note any encroachments of your property onto a neighbor’s and vice versa.
Your appraiser will inspect the property to ensure no existing damage or imminent danger from natural hazards like flooding, mudslides, avalanches and sinkholes. They’ll also check for other hazards like lead-based paint, radon gas and environmental contamination.
One issue that appraisers often report is the lack of an efficient and acceptable heat source inside the home. A heating system must maintain a minimum temperature of 50 degrees Fahrenheit in the plumbing areas of the home. Also required are adequate and code-approved electrical systems with all the proper fixtures.
Appraisers also check the roof, attic, crawl space and basement for signs of water damage or other obvious structural problems. Faulty windows can be a huge issue on an appraisal report.
Manufactured and modular homes carry a few additional requirements to ensure they meet all state and local standards to be classified as real estate. We offer loans on both if they are classified as real property. Manufactured homes must be built after June 15, 1976.
One big factor 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.
There are no restrictions on who can pay for a pest inspection. If expenses are an issue for the seller, offering to pay for the inspection could help get your offer accepted.
The VA requires pest inspections in all but these 11 states: Alaska, Colorado, Idaho, Maine, Minnesota, Montana, North Dakota, Oregon, South Dakota, Wisconsin and Wyoming. In some states, inspections are only required in certain counties.
How To Complete The VA Appraisal Process
Now that you know what a VA appraisal looks for, let’s break down what you can expect from the process itself.
Once you begin the VA loan process, your Home Loan Expert will be able to schedule a VA-approved appraiser for you. The VA handles the scheduling and randomly assigns an appraiser to your property. Typically, the appraisal is requested early in the VA loan process to guarantee enough time to address any issues found during the appraisal.
Along with fees, the VA sets standards for how long the turnaround on an appraisal can be, but this varies by state. Across the U.S., appraisers have 7 – 21 business days to complete their reports. This doesn’t necessarily mean the whole process will be complete in under 3 weeks, however. If you need repairs, the process could take quite a bit longer.
3. Appraisal Procedure
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 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. The VA will then review the appraisal report and issue a Notice of Value.
4. Home Inspection
It’s important to note that your VA appraisal doesn’t cover the same ground as a home inspection. Regardless of your loan type, a home inspection and appraisal are different parts of the home buying process. Home inspections take a more in-depth look at a home’s physical condition, examining the structure, attic, basement, electrical system, plumbing and other parts of the home.
While the VA appraisal process has some basic checks in place to ensure safety and livability, you should still consider getting a home inspection before finalizing your purchase. It’s important to have a thorough understanding of everything your home has in store for you.
Once you’ve made it through the VA appraisal and inspection process, you’re ready to close. Closing costs typically look about the same with a VA loan as other types of home loans. Most clients have to pay a VA funding fee, but this can be paid at closing or built into the loan.
A good real estate agent will let you know what to expect at closing and help make the closing process, which includes closing day, run as smoothly as possible.
Ways To Handle Problems With Your VA Loan Appraisal
A few things can go wrong with a VA appraisal, complicating the home buying process. Being prepared can help you deal with these issues if they arise.
The Property Doesn’t Meet MPRs
If your appraiser determines the property doesn’t meet minimum property requirements and needs repairs, you’ll need to get those taken care of before you secure your VA loan. Ideally, the seller will agree to pay for these repairs, but they aren’t obligated to do so. If they refuse, you can pay for them yourself or walk away from the property.
Be sure to consult your real estate agent and lender to discuss your options. It can be difficult to weigh the pros and cons in this situation if you’re not a VA loan expert.
The Appraisal Is Lower Than Expected
The appraisal sets a ceiling on how much you can borrow with your VA loan. If the appraised value of the home is less than the sales price, you might not have the funding to cover the purchase.
You have the option of covering the deficit in cash, but that isn’t a realistic option for many home buyers. If that’s your situation, you’ll have to negotiate with the seller, ask the VA to reconsider its appraisal or simply walk away from the property. It’s important to note that a reconsideration of value can only be granted by working with your lender and proving errors were made that impacted the valuation.
A low appraisal can be a tough situation to navigate, so make sure to speak with your real estate agent and lender to determine the best course of action.
VA Appraisal FAQs
Below are a few frequently asked questions about the VA appraisal process.
Are VA appraisals tougher than non-VA appraisals?
VA appraisals aren’t necessarily more difficult than conventional appraisals, but the Department of Veterans Affairs does require that homes meet the VA’s minimum property requirements. These standards can be stricter because the VA ensures the homeowner is safe and secure in their new house before they approve the mortgage.
Can I use the same VA appraiser more than once?
The Department of Veterans Affairs randomly assigns VA loan appraisers, so you won't be able to request a specific person to perform your appraisal or encounter the same appraiser more than once. This process also prevents any bias or conflict of interest with your VA home loan.
Are VA appraisals required on loan refinances?
VA appraisals are required to get a VA cash-out refinance or a rate/term refinance when you’re coming from a different loan type. However, you may not need an appraisal for a VA Streamline Refinance (IRRRL).
What will fail a VA appraisal?
The VA wants homes to be move-in ready for veteran homeowners, so any major structural issues that may affect their health and safety can result in a low appraisal. Common issues include insufficient heating and electrical systems, water damage, roof damage, rotting wood and pest damage or infestation.
The Bottom Line
An appraisal doesn’t have to be a daunting step in your effort to buy a home. Learning more about the process is a great start, but it also helps to have the right team to back you up.
Make sure your real estate agent and lender are both 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, and lenders who have dedicated VA loan experience can help guide you through the home buying process with ease.
Ready to begin your home buying journey? You can get started today and explore your VA mortgage options. Our Home Loan Experts are standing by for your call at (888) 452-0335.