How to Buy a Condo Unit in California with a VA Loan

VA loans allow military members and veterans to buy a home in California with no money down, a major advantage in a pricey real estate market like ours.

This program also allows you to purchase a variety of property types, including traditional single-family homes, townhomes, and condo units.

Acceptable Property Types for a VA Loan

Many cities across the state of California are currently experiencing a housing market shortage. This means there aren’t enough homes on the market to satisfy the demand from buyers.

Because of this, military members and veterans who are searching for a home to buy might have to consider additional property types to improve their chances.

The good news is that the VA loan program allows for this. The Department of Veterans Affairs knows that buyers need access to a wide range of housing options. So they’ve built that flexibility into the program.

In California, you could use a VA loan to do any of the following:

• Buy a single-family home, townhouse, or multi-family up to 4 units
• Buy a condo located within a VA-approved project or development
• Buy a home and rehab/improve it
• Buy a manufactured home and lot

Rules for Buying a Condo With a VA Loan

In order to buy a condo in California with a VA-guaranteed mortgage loan, you’ll need to ensure the unit is part of an approved condominium project.

• If it has been approved by the VA already, you’re good to go.
• If it’s not approved, you would have to request a review from the VA, or else find another condo to purchase.

Here’s how the Department of Veterans Affairs explains it in their buyer’s guide:

Similarly, the official handbook for mortgage lenders states that: “condominiums … must be approved by VA before any lots or units in the project are eligible for loan guaranty.”

Eligibility: Who Can Use the VA Loan Program?

To buy a condo in California with a VA loan, the borrower must also meet specific eligibility requirements. This program caters to military members and veterans who have served honorably for a certain period of time.

Generally speaking, the following groups are eligible for a VA-backed home loan:

• Active-duty military who have served for at least 90 days
• National Guard and Reserve members who have completed at least six years of regular service or 90 days of active duty
• Surviving spouse of a military member who died in the service or due to a service-related disability

How to Find Approved Condominium Projects

The good news is that borrowers can check condo approval status with just a few short steps. The VA maintains a database with all approved condominium projects, and it’s available online.

Here’s how to find approved projects in the area where you wish to buy:

1. Visit the following URL: https://lgy.va.gov/lgyhub/condo-report
2. Check the box that says “retrieve only approved condos”
3. Enter “California” in the state field along with your city or county
4. Click the “enter” or “submit” button to process your request

Once you’ve completed the above steps, you’ll receive a list of approved condominium developments in your chosen area. You could use a VA home loan to purchase a condo unit in any of those developments, if you’re eligible for the program.

If you have a specific condo project in mind, but it’s not on the approved list, your mortgage lender might be able to request a review from the VA. There’s a process in place for this.

Benefits of Buying a Condo vs. Detached Home

Statistically speaking, most home buyers in California gravitate toward traditional single-family detached homes. A “detached” home is a freestanding residential building that does not share any walls or common structural elements with neighboring houses.

With a condo, on the other hand, residents own individual units within a larger building or a community of buildings. The unit itself is a self-contained living space, while common areas and amenities are owned jointly by all owners within the development.

The Pros of Buying a Condo

• Affordability: Condo units generally have a lower purchase price and property taxes compared to detached homes.
• Amenities: They often include shared amenities like pools, gyms, and security features.
• Convenience: Many condos are located in desirable urban areas with easy access to public transportation and amenities.
• Lower Maintenance: Exterior maintenance and repairs are typically covered by the homeowner association (HOA).

The Cons of Buying a Condo

• HOA Fees: Monthly fees for condos can be costly and cover maintenance, amenities, and reserves.
• Rules and Regulations: HOAs have rules that may restrict renovations, pets, rentals, and other activities.
• Less Privacy: Shared walls and common areas provide less privacy when compared to a regular detached home.
• Limited Control: As a condo owner, you’ll have less control over exterior appearance and shared spaces.
• Appreciation: In some markets, single-family detached homes tend to appreciate faster than condos.

You Could Finance 100% of the Purchase Price

Regardless of whether you buy a condo or a regular home in California, the VA loan program offers the same benefits. Among other things, it allows you to finance 100% of the purchase price.

This means you could buy a condo in California with no down payment whatsoever.

In contrast, borrowers who use FHA or conventional mortgage products almost always have to make a down payment. And in a state like California, even the minimum down payment could easily exceed $25,000.

Appraisal Mandatory, Home Inspection Optional

All homes purchased with a VA loan have to be appraised prior to loan approval, and that applies to condo units as well.

The Department of Veterans Affairs backs these loans and compensates mortgage lenders in the event of borrower default. So they need to ensure that the condo/home is worth the amount the borrower has agreed to pay for it.

The VA also needs to know that the property is safe and habitable for the new homeowner, with no major defects or hazards. The appraisal process accomplishes several things:

• Determining Value: The appraiser will assess the specific condition, size, and features of the condo unit to determine its fair market value.
• Verifying Eligibility: The appraisal helps ensure that the property being purchased meets VA property standards and is suitable for a VA loan.
• Loan Amount: The appraised value will determine the maximum loan amount the VA will guarantee.

Even if the condominium complex itself has already been approved by the VA, the individual unit will still have to be appraised prior to purchase.

While the appraisal is required for VA-backed condo purchases in California, the home inspection is optional. Buyers can choose whether or not they want to hire an inspector to perform a more comprehensive review of the home.