Do California VA Loans Require a Home Inspection for Purchases?

First-time home buyers who are considering the VA loan program tend to have a lot of questions about how the program works including the minimum requirements. Today, we’ll address one of those common questions:

A standard home inspection is usually not required for VA loans in California. The official guidelines do require a property appraisal, which is used to determine the home’s market value. And the appraisal does have a basic property evaluation built into it. But it’s not the same as a full home inspection, which is optional.

Home Inspection Not Required for California VA Loans

The VA home loan program works a little differently when compared to a conventional or regular mortgage loan. Through this program, eligible home buyers can buy a house in California with no money down. That’s because the federal government partially guarantees the loan against default.

But the Department of Veterans Affairs (VA) does not actually lend money to borrowers. The funding comes from a mortgage lender in the private sector, as with other types of home loans. The VA just provides the guarantee. They also establish most of the rules associated with this program.

One of those rules has to do with home appraisals and minimum property requirements. Here’s the gist of it:

• The VA does not require borrowers to have a home inspection.
• But they do require a property appraisal to be performed.
• The appraisal is used to determine the current market value of the house.
• The appraiser also evaluates the house using the VA’s minimum property requirements.

The VA Does Require an Appraisal

But it’s important to understand the difference between a full home inspection (the kind you would get by hiring an inspector yourself) and the partial inspection that’s built into the VA home appraisal. They are two separate procedures.

Here’s how the Department of Veterans Affairs explains the difference, in Chapter 12 of VA Pamphlet 26-7:

The basic inspection performed by the VA-assigned property appraiser is less detailed when compared to a traditional home inspection. In the context of California VA loans, the appraiser is mostly concerned with health and safety issues as outlined in the official guidelines.

Benefits of Having the Home Inspected

Even though it’s not required for VA loans, a home inspection can help you identify potentially serious problems with the property before you purchase it.

This knowledge could help you negotiate a better price, plan for future expenses, and make a more informed decision about whether to proceed with the purchase.

Here are some other benefits of a home inspection when using a VA loan in California:

1. Uncovering Hidden Issues

Unless you are a licensed contractor or construction professional, you might overlook some hard-to-spot problems when visiting a home for sale. Some issues can be obvious and apparent, while others require more of a trained eye.

For example, a home buyer using a VA loan would probably be able to spot a major crack within the foundation. But they might not notice a “double-tapped” circuit breaker that prevents a fire hazard. These are the types of things inspectors look for.

This is arguably the biggest benefit of using a home inspection with a VA loan in California. It helps you identify issues that might lead to costly repairs or safety hazards down the road.

The state of California does not have any specific licensing or education requirements for home inspectors. Because of this, the inspection process and checkpoints can vary from one inspector to the next.

• Roof: condition of shingles, flashing, gutters, and downspouts
• Foundation: cracks, bowing, or settling
• Drainage: proper grading away from the house
• Decks and porches: structural soundness, railings, and stairs
• Windows and doors: operation, seals, and weatherstripping
• Chimneys and vents: condition and proper clearance from combustibles
• Plumbing: leaks, corrosion, and proper water pressure
• Electrical: wiring, outlets, and switches
• Heating and cooling systems: operation and efficiency
• Attic and crawlspace: insulation, ventilation, and signs of pests
• Fireplace and flues: condition and proper clearance from combustibles
• Smoke detectors and carbon monoxide detectors: presence and proper operation

2. Additional Peace of Mind for the Buyer

A home inspection can also give you peace of mind when buying a house with a VA loan. When you have a property thoroughly inspected, you will discover the true condition of the home prior to purchasing. This allows you to make a well-informed purchasing decision.

• With a home inspection, the buyer will understand the current condition of the property including any items in need of repair. The buyer can then decide whether they want to proceed with the purchase or exit the deal (perhaps by using an inspection contingency to protect their deposit money).
• Without an inspection, a California home buyer won’t know very much about the property’s true condition. They might discover that it has serious problems, but only after they have closed the deal and moved into the home. In that case, they would be on the hook for any repair costs.

This is a key benefit to having a home inspection. It gives you the information and knowledge you need to make a smarter buying decision, while eliminating surprises.

3. More Room to Negotiate With the Seller

A home inspection could also help you negotiate with the seller, and in several ways.

In a typical real estate transaction in California, the property inspection takes place after the buyer and seller have signed a purchase agreement. But that doesn’t mean the negotiations are done.

For example, let’s assume that an inspector discovers significant damage to the roof of a home, with multiple leaks present. The estimated cost for repairs is $5,000.

The buyer might then present the following request to the seller:

“Based on the home inspection report, there are some concerns we would like to discuss. The roof has significant damage, and it’s going to cost approximately $5,000 to repair. We would like to propose that you either (A) take care of the repairs before the closing or (B) provide a credit for this amount toward the sale price.”

Granted, your ability to negotiate will partly depend on current market conditions.

• If you’re in a highly competitive market with multiple competing buyers, you might not want to make this kind of request.
• In a slower market, on the other hand, buyers typically have more leverage when requesting repairs based on the inspector’s findings.

The point here is that the home inspection could give you additional negotiating leverage, especially if it uncovers significant issues.

Summary of Key Points

This can be a confusing subject, especially for first-time buyers. So let’s wrap up with a quick summary of the key takeaway points from this guide:

• In California, home inspections are not required for VA-guaranteed home loans.
• But the government does require a home appraisal for all VA purchase loans.
• The appraiser will determine the current market value of the house.
• He or she will also perform a basic property evaluation as required by the VA.
• The home must meet the minimum property requirements for this program.
• As the buyer, you have the right to hire a third-party home inspector.
• A more detailed inspection could give you better insight into the condition.
• It could also help you negotiate for repairs or a reduction in the purchase price.

Have questions? Bridgepoint Funding specializes in California VA loans and serves borrowers all across the Golden State. We can answer any questions you have about this program and help you determine the best financing method for your situation. Please contact us for more information.