VA Home Loan Inspection and Appraisal Requirements

The VA loan program, backed by the Department of Veteran Affairs (VA), helps eligible active-duty military, veterans and surviving spouses buy a home or refinance a mortgage. If you meet service requirements and other criteria, you can get a VA loan with no down payment or mortgage insurance.

However, VA loans come with rules regarding the home you buy. The home has to meet Minimum Property Requirements, a set of standards pertaining to the home’s safety, structure and more. A VA-approved appraiser evaluates the property based on these requirements.

What is a VA appraisal?

A VA home appraisal is a professional determination of a home’s value by a VA-approved appraiser. A VA appraisal also considers whether the home is “safe, structurally sound and sanitary” based on specific standards called Minimum Property Requirements (MPRs). These standards are maintained by the Department of Veterans Affairs, which guarantees the VA loan program, and designed to protect borrowers.

Your lender won’t approve the loan unless the MPRs are met (or you’re able to get a waiver). That may mean you or the seller need to make repairs before you can close the loan.

Does a VA loan require a home inspection?

No. A VA loan doesn’t require a home inspection. Unlike a VA appraisal, a home inspection doesn’t determine a home’s value or confirm the home adheres to VA Minimum Property Requirements.

Still, most home buyers — VA loan or not — get an inspection so they understand the condition of the home; whether appliances and major systems are working; and any repairs that may need addressing now or in the future.

When preparing an appraisal report, a VA appraiser can’t take home inspection results into account. Instead, the appraiser has to recommend repairs, if any, based on the MPRs. Once the appraisal report is complete, you’ll receive a Notice of Value (NOV), which may include information about obtaining an optional inspection. It’s entirely up to you, but generally, it’s smart to get one.

What does a VA appraiser look for?

VA appraisers use the VA’s Minimum Property Requirements to guide their judgment. Based on those requirements, here are some of the areas VA appraisers take note of when evaluating a home:

Residential use

VA loans are only available for residential properties with a maximum of four units, and one of those units has to be your primary residence (the home you live in). If part of the property is used for a business or commercial purposes, it may still be eligible for a VA loan provided there’s only one commercial unit and the property is mainly used as a residence.

Zoning

The property has to conform to local zoning ordinances. If it’s an older home that used to meet zoning requirements but now doesn’t, it may still pass the appraisal provided the areas of non-compliance don’t impact the home’s “marketability” or safety. Marketability refers to the ability to easily sell the home.

Living space

The property has to have “sufficient” space for living, sleeping, cooking, eating and sanitation (bathroom). There isn’t a minimum square footage — unless it’s a manufactured home, which has its own requirements — but there has to be enough space for the household to carry out daily functions.

Property access

In addition to living space, a VA appraiser checks whether the home is accessible year-round, either by vehicle or walkway and from a public or private street. If it’s a private street, the street has to have a permanent easement and be maintained by the homeowners association (HOA), if there is one, or through some other arrangement. You also have to be able to access the property, your unit and backyard directly, not via other properties or units.

Encroachments

Encroachment happens when a structure, such as a fence, garage or shed, unlawfully intrudes on another person’s property. Any encroachments have to be remedied in order to pass the VA appraisal.

Heating

In most locations, the home has to have a heating system that maintains a temperature of at least 50 degrees Fahrenheit in rooms or areas with plumbing. The heating system has to be permanently installed (not a wood-burning stove, for instance). The exception is if a home is in a warm climate — in that case, you may not need a permanent heating system to pass the appraisal.

Water 

The property has to have a reliable supply of “safe and potable” water for consumption, bathing and sanitation. This requirement also includes hot water and a safe way to dispose of sewage. The home may hook up to either a public water supply or private well, so long as the supply meets federal or local quality standards. 

Roof

The VA also requires the home’s roof to be free of leaks and to have “reasonable future utility, durability and economy of maintenance,” meaning it won’t immediately need repairs.

Termites

The VA and most states require a wood-destroying insect inspection as part of the VA appraisal process, whether there are signs of damage or not.

Generally, if you’re buying a detached home, the VA appraisal includes a check for termites or other wood-destroying insects, fungus and dry rot. If it’s found, the appraiser can’t complete their report until an inspector assesses the damage. If it’s a condo in a high-rise or a townhome that shares walls, you may not need the inspection.

Lead-based paint

Most homes built before 1978 have lead-based paint. The VA doesn’t require homes to be lead-free, but any lead-based paint should be intact (not peeling, for instance). If it’s defective, you’ll need to properly remove or cover the paint.

Attic, basement and crawl spaces 

If there’s an attic, basement or crawl spaces in the home, the VA appraiser will assess several areas, including looking for signs of moisture, such as water pooling or stains. Among the requirements, the attic and crawl spaces have to be sufficiently vented, as well. 

Quality of construction

Regardless of when the property was built, it can’t show signs of defective construction, such as leaks, rot or an unevenly settling foundation. If the home has these issues, its structural integrity may be compromised — an often expensive repair that may not be worth taking on, and a situation that’s risky for you and your lender. 

Exterior surroundings

A VA appraisal also involves an evaluation of the outside of the home and surrounding area. This includes:

• Drainage: The property has to be graded so that water flows away from the home without pooling. 
• High voltage electric transmission lines: The property can’t be within a high voltage electric transmission line easement.
• Soil: The VA recognizes that most homes settle over time. However, if the home is at risk for a sinkhole or other dangerous situation due to inadequate soil, it won’t pass the appraisal.

Note that this isn’t an exhaustive list, and there may be exceptions to the requirements.

How much does a VA appraisal cost?

The VA sets maximum appraisal fees based on location and the type of home. For a single-family home, the fees range between $650 and $1,500. 

A VA appraisal usually costs more than a traditional home appraisal because it takes longer to complete and requires a VA-approved professional. You’ll be responsible for paying the appraisal fee at the time of the evaluation, but you may be able to negotiate a concession so that the seller reimburses you for it at closing. 

What happens if the home doesn’t meet VA appraisal requirements?

If the home you want to buy doesn’t meet VA appraisal requirements, there are a few things you can do:

If you have to make repairs

If the VA appraiser finds that the home doesn’t meet Minimum Property Requirements, you’ll be required to remedy the issues before you can close the VA loan. Your options include:

• Negotiate repairs: You can ask the seller to make the repairs before you close, or to provide credits at closing to help you cover the costs yourself. (Seller concessions toward prepaid costs and other non-closing cost items can’t exceed 4% of the loan amount — talk to your lender about what counts.) If you walk away, the seller may encounter another buyer who asks for the same repairs, so you may have a stronger case going this route.
• Pay for repairs yourself: If the seller won’t make repairs and you have the funds, you can pay for the repairs yourself. You can’t DIY them, however, unless they’re cosmetic or minor in nature. You may not need to make all repairs by the time you close, either — talk to your lender to learn your options.

If the appraised value is lower than the offered price

You can only get a VA loan for the amount the home appraised for. If the appraised value is lower than what you offered (and what the seller accepted), you may need to make a down payment, negotiate a lower price with the seller or request a Reconsideration of Value (ROV). 

• Negotiate price: The seller may be willing to lower the purchase price to meet the appraised value. This may be the best option for both parties — you won’t have to start over with a new loan and a different home, and the seller won’t have to wait for another offer.
• Pay the difference: If you can’t negotiate a lower price but still want the home, you’ll need to pay the difference between the appraised value and the purchase price. This means you’ll need to make a down payment, even though VA loans don’t require one.
• Reconsideration of Value (ROV): If you think the VA appraiser missed the mark on value, you can request a Reconsideration of Value (ROV) with your lender or VA Regional Loan Center. You or your real estate agent can provide additional information to help your case. If the VA determines a higher appraised value is warranted, you’ll get a new Notice of Value (NOV).

Keep in mind that if you can’t make the numbers work, you may have to walk away from the transaction. Before putting offers on homes, work with your real estate agent to ensure your purchase agreement allows for this possibility.