Do VA Loans Require Home Inspections?

VA loans help eligible service members, veterans, and surviving spouses achieve homeownership, offering attractive features like no down payment and no private mortgage insurance. While a traditional home inspection is not typically mandated for loan approval, VA loans require a specific property assessment known as a VA appraisal. This appraisal ensures the property meets certain standards set by the Department of Veterans Affairs.

The VA Appraisal Process

The VA appraisal is a specialized evaluation performed by a VA-approved appraiser, distinct from a general home inspection. Its purposes are to determine the property’s fair market value and confirm it adheres to the Department of Veterans Affairs’ Minimum Property Requirements (MPRs). The appraiser assesses the property’s condition and compares it to recent sales of similar homes to establish its market value.

A VA-approved appraiser, selected by the VA, conducts this assessment. The lender initiates the appraisal process once a purchase contract is in place, sending a request to the VA. The appraiser visits the property to perform a physical inspection of its interior and exterior. The buyer typically pays for the appraisal, with fees ranging from $400 to $1,200, depending on the property’s location and type.

The appraiser compiles a detailed report, which includes the estimated value and any repairs necessary to meet VA guidelines. This report is submitted to the lender, who then reviews it to ensure compliance with VA standards. The appraisal process generally takes 10 to 14 business days, though this can vary based on location and appraiser availability.

Minimum Property Requirements (MPRs)

VA appraisers look for compliance with Minimum Property Requirements (MPRs), which ensure the home is safe, sanitary, and structurally sound. These requirements protect veterans and military families, ensuring they acquire a habitable property. MPRs cover a range of conditions, and issues identified typically require resolution before the loan can close.

MPRs address health concerns like safe access to the property, adequate sanitation, and potential hazards such as lead-based paint in homes built before 1978. Chipping paint on the exterior, for instance, must be remediated with non-leaded paint before closing. Inadequate or contaminated water supply and issues with individual sewage disposal systems can also lead to MPR non-compliance.

For safety, the appraiser checks for exposed electrical wiring, insufficient heating or cooling systems, and structural defects that could pose a collapse risk. Missing handrails on stairs or significant trip hazards are also flagged. Structural soundness is evaluated by examining the roof for damage or active leaks, checking for foundation issues, and ensuring major systems like plumbing and electrical are functional. Evidence of wood-destroying insects, fungus, or dry rot must also be noted and addressed due to their impact on structural integrity.

Handling Appraisal-Identified Issues

If the VA appraisal identifies issues that do not meet MPRs, these deficiencies are noted in the appraiser’s report. The lender typically requires these issues to be resolved before the loan can proceed to closing. This often leads to negotiations between the buyer and seller regarding who will cover the repair costs. While the seller is often asked to pay for repairs, they are not obligated to do so, and the buyer may sometimes choose to cover these expenses.

Once the required repairs are completed, a re-appraisal or a compliance inspection, sometimes called a “tidewater initiative,” may be necessary to verify the work was done satisfactorily. A flat fee, often around $150, may be charged for this re-inspection. If the identified issues are not resolved and the property continues to fail MPRs, it will not qualify for VA financing. In some unique cases, an escrow holdback may be arranged, allowing certain repairs to be completed after closing, with funds held in escrow until the work is finished.

Understanding the Home Inspection

While the VA appraisal is a mandatory step focusing on property value and MPR compliance, a buyer’s independent home inspection is optional. The home inspection serves a different purpose, providing a comprehensive understanding of the property’s overall condition. This detailed examination identifies potential issues, both major and minor, that extend beyond the VA’s minimum requirements, encompassing cosmetic and functional concerns.

A home inspection helps buyers uncover hidden problems, such as issues with HVAC, plumbing, electrical systems, and structural elements, that may not be apparent during a casual viewing. This information can be invaluable for negotiating repairs or price adjustments with the seller. The average cost of a home inspection typically ranges from $300 to $500, varying based on home size, age, and location. Even with a VA appraisal, a thorough home inspection is widely recommended as a crucial part of the buyer’s due diligence, providing peace of mind and potentially saving thousands of dollars in future repair costs.