From the basics (no down payment) to special cases (farm loans, construction loans) to less-heralded programs (go green!), VA-backed loans offer a variety of benefits for eligible borrowers.
But as the agency itself outlines in an online reference guide (PDF), there are parts of the real estate purchasing process that VA can neither control nor guarantee. While these issues may not arise with your particular loan, it’s worth knowing the limitations of any program before taking part.
Here are four such limitations for VA borrowers. The agency cannot:
1. Guarantee your home’s condition. While VA appraisals do check for a variety of structural and other issues, they aren’t meant to substitute for a home inspection. VA recommends an inspection prior to purchase; these checks are more likely to find smaller problems that could grow into big ones, and most sellers are willing to discuss repair options (and costs) prior to a sale.
2. Guarantee your future home’s condition. While VA loans can be taken out on property before the home is built, and while VA does require certain safeguards from the builder to ensure proper construction, there is no mechanism for VA to “compel the builder to correct construction defects or otherwise live up to the contract,” per VA guidance. Any punishment the builder faces would come in the form of an inability to participate in future VA-backed projects.
3. Guarantee your investment. While VA requires appraisals to track a home’s value, market forces are outside the agency’s control.
4. Offer legal aid. While the agency has programs that can assist veteran borrowers in avoiding foreclosure and dealing with other loan-related issues, the agency won’t field advocates on your behalf.
Now that you know the limitations, visit our VA Loan Center for more on what a VA-backed loan can offer.
Kevin Lilley is the features editor of Military Times.