Guide to VA Loan Appraisals

Learn More About VA Home Loan Appraisals and Guidelines

If you’re purchasing a home with a VA loan—a mortgage backed by the U.S. Department of Veterans Affairs—you’ll need an appraisal from a VA-certified appraiser. Find out more about why an appraisal is necessary, what you can expect, and how much it will cost.

What Is a VA Loan Appraisal?

For most VA home loans, the VA requires a home appraisal to assess a home’s value and confirm the property meets VA standards for safety and livability. VA loan appraisals aren’t necessary for every type of VA loan—VA IRRRL streamline refinances, for example, don’t require appraisals. In the case of a refinance from a VA loan, the home has already met VA standards to secure the original loan, but an appraisal may still be necessary if home prices have changed substantially since the original loan closed.

Why Is a VA Home Appraisal Necessary?

An appraisal from a VA-certified appraiser is required with a VA loan for two reasons: It establishes the home’s fair market value and determines whether or not it meets the VA’s Minimum Property Requirements (MPRs).

• Fair market value: This is very close to the amount a buyer should pay for a house, because it represents the value of the home on the current open market.
• Minimum property requirements: The VA home appraisal process includes an evaluation of the property to ensure it’s safe, structurally sound, and sanitary.

VA Home Loan Appraisal vs. Home Inspection

The appraiser’s evaluation is not a home inspection. A VA home inspection is a much more detailed look at the property, and, while it’s not required for a home purchase, it’s highly recommended. Here are key ways they compare:

How Do VA Appraisals Work?

Unlike with other types of mortgages, the lender doesn’t order and manage the appraisal for VA loans. Instead, they contact the VA, which selects an approved appraiser and handles the process.

The VA appraiser will look for at least three comparable homes (called comps) that are similar in square footage, age, and condition and have recently sold in the area of the home you’re buying. The sale price of these homes is used to help the appraiser calculate your home’s fair market value.

The fair market value plays a crucial role in a lender’s evaluation of your loan. They want to make sure the home you’re buying is worth the purchase price, because mortgage guidelines prevent people from overpaying for a home (by only allowing mortgages up to the appraised fair market value). It’s not recommended to ever pay more than the appraised value of a home.

VA Appraisal Fees and Timeline

The cost and timeline for completing the appraisal may vary based on the property’s location. The VA appraisal fee is included in your closing costs, and according to the VA’s appraisal guidelines, you can expect to pay anywhere from $525 to $1,300 for the appraisal.

The VA has standards for how long it takes to complete the appraisal. Depending on your region, the VA appraisal timeline ranges from 7 to 20 days. However, high demand in certain areas could lead to longer timelines and higher VA appraisal fees.

What if the VA Appraisal Is Lower Than the Sale Price?

If the fair market value is lower than the sale price, you have a few options to work around this issue:

• Ask for a reconsideration: VA homebuyers can seek a Reconsideration of Value, in which you and your real estate agent can provide comps not included in the appraiser’s report to help substantiate the purchase price. You can also review the appraiser’s report to check for any errors in calculating values and provide this evidence to your lender.
• Ask the seller to lower their price: You can use the appraiser’s valuation to justify asking for a lower sale price. The seller may be willing to negotiate to avoid missing out on a willing buyer. Keep in mind, you can always cover the difference between the appraised value and your purchase price in cash. It’s not recommended, but it’s always an option.
• Back out of the deal: The VA Amendment to Contract protects VA buyers if the home appraises for less than the sale price. You’ll be able to walk away from the deal and get your earnest money deposit back.

VA Appraisal Requirements

The second part of the VA appraisal process is determining whether a home meets the VA’s MPRs. The VA appraiser will assess the interior and exterior of the home and make note of any issues that’ll need to be repaired before the loan can close.

The VA MPRs that the appraiser will assess include:

• Safe property access: There must be safe access to the home from the street or a private driveway.
• Adequate living area: The home must have enough space for living, sleeping, cooking, and sanitary facilities.
• Safe mechanical systems: The plumbing and electrical systems should be functioning correctly and safely.
• Safe water supply: There must be a continuous supply of safe water for drinking, bathing, and sanitary uses, access to hot water, and sewage disposal.
• Heat supply: There must be a permanently installed heat source that’s capable of maintaining a temperature of at least 50 degrees Fahrenheit in areas with plumbing.
• Roofing is in good condition: The VA defines this as providing “reasonable future utility, durability, and economy of maintenance.” It should be free of any holes and should not be missing shingles.
• Clear, accessible crawl space or basement: The basement or crawl space should be easily accessible and free of debris and moisture.
• No health or safety hazards: The home must be free of issues like radon and asbestos. These problems will need to be resolved before your loan can be approved.
• No lead-based paint: For homes built before 1978, lead-based paint is presumed to be present. Any cracked or loose paint must be remediated.
• No defective conditions: Examples include poor construction, settlement, structural issues, rot, decay, or leakage.

VA Loan Termite Inspection

The VA appraisal process also requires the examination of the home for evidence of termites. Any active or previous infestation will require a separate termite inspection, and damage must be repaired before your VA loan is approved. For some states, a VA pest inspection is required even if there are no signs of termites. The cost of an inspection ranges from $50 to $150.

VA Home Appraisals for Townhomes, Condos, and Manufactured Homes

The VA’s conditions for condominiums are similar to those for single-family, detached homes, but with one major difference—these properties require VA approval of the entire complex before they’re eligible for a VA purchase loan. However, townhomes and planned-unit developments don’t need to be VA-approved, even if they’re part of a complex with units that are like condos.

Freedom Mortgage can help you buy a manufactured home with a VA loan that will be installed or occupied on another site or location, located in a condo community, or subject to leasehold.

Final Thoughts: Be Prepared for Your VA Appraisal

Understanding the VA appraisal process can help you move confidently through your homebuying journey with a VA loan. From determining the property’s value to ensuring your future home meets VA safety and livability standards, a VA appraisal helps protect you.

If you’re ready to take the next step toward homeownership with a VA loan, getting prequalified is a great place to start. Get prequalified today to find out how much home you can afford, how much money you can save, and take one step closer to moving into your new home.