VA Loan Appraisal Requirements [Updated for 2024] (2024)

One of the most tangible and valuable benefits available to those who opt to serve their country through military service is the VA home loan program. And while every homebuying process is a journey from browsing for homes to the closing table, the VA has some requirements unique to its program that are intended to protect the borrower and ensure a sound investment.

This protection is offered in the form of the VA loan appraisal, a process by which an approved appraiser establishes the market value and assesses the condition of a property. This evaluation is different than a traditional home inspection, and the VA’s standards will differ slightly from the appraisal requirements that a borrower would find through other home loan programs.

What Is a VA Loan Appraisal?

A VA loan appraisal is an estimate of a property’s market value and is conducted by a VA-approved appraiser, ensuring that the property qualifies for the requested loan amount. A property must also meet a list of standards set by the VA, called Minimum Property Requirements (MPRs). This appraisal process is required by the Department of Veterans Affairs for all VA home loans and cash-out refinances.

A VA loan appraisal will also ensure that the home is a sound investment and safe and livable when a buyer takes possession.

Differences Between VA Appraisals and Home Inspections

A borrower may be confused between the VA appraisal process and the protections offered by a traditional home inspection. While there is surely some overlap in what a VA appraiser will look for in the effort to ensure livability and fair market value, a home inspector takes an even deeper dive into every aspect of the home and its systems to find and flag potential problems before the purchase is finalized.

Another item to note is that while a VA appraisal is required to secure a VA home loan, a home inspection is optional under the program. Therefore, it’s important to understand what’s covered by each assessment and where you might be vulnerable should you forgo the home inspection.

Again, the VA appraisal will assess the property for a select list of requirements to ensure it is safe, sanitary, livable and a sound investment for the buyer. But passing and conforming to these minimum property guidelines as set by the VA only covers certain categories, meaning a buyer may still be vulnerable to a variety of other issues.

But for a very modest cost, a home inspector takes an in-depth look at all aspects of the home, searching and testing for existing and potential problems in the most important systems and components such as the structure, wiring, plumbing, HVAC, roof, drainage, and more.

Why Does the VA Require an Appraisal?

The appraisal process is necessary for VA home loans because it ensures the homebuyer is making a sound investment in a property that isn’t overpriced or in need of significant repairs. The process also ensures the Department of Veterans Affairs is backing a loan that does not exceed the property’s market value. In other words, the appraisal is meant to protect and safeguard the interests of both the borrower and the loan guarantor (the VA).

Minimum Property Requirements (MPRs) For VA Appraisals

So, what will a VA-approved appraiser look for when assessing a property? The VA has established a list of Minimum Property Requirements (see the list here) that appraisers must review to make sure a property is safe, structurally sound and sanitary, among other considerations. The MPRs cover each of the following aspects of a property’s interior and exterior:

Access Requirements

An appraiser will ensure a qualifying property includes year-round street access to the home and be safely accessible without the need to pass through neighboring properties. Private roads must be managed by a homeowner’s association and include a permanent easem*nt. Finally, no part of the property can encroach on another property, including secondary buildings like garages or sheds.

Space Requirements

Qualifying properties will offer enough functional space for day-to-day living, such as room to sleep, cook, dine, plus suitable bathroom facilities.

Electricity

The appraiser will take a close look at the home’s electrical system, checking for damaged or poor wiring, while also ensuring there’s a sufficient electrical supply for powered equipment, lights and appliances.

Heating and Cooling Systems

In some regions of the country, it may not be required for a property to have a system that both heats and cools, as air conditioning is sometimes considered optional. If there are heating and cooling systems in place, the appraiser will check to make the system is functional and able to heat and/or cool the entire home and maintain an adequate temperature.

Water Supply

Every qualifying property will offer year-round access to a safe and potable water supply for drinking and bathing, as well as a working means of sewage disposal and a functional water heater. Use of public water isn’t required, but all private wells/water supplies will be tested to ensure they meet or exceed water quality standards.

Drainage

The assessment will check for proper drainage to ensure that rain water is able to drain away from the foundation, and that water isn’t pooling or retained on the property.

Roof

A roof must be in sound condition, able to prevent leaks and to offer “reasonable future utility,” meaning it is not so old that it is in need of immediate replacement. A roof with old or worn shingles may require a letter submitted by a contractor to confirm that the roof can serve for another three or more years. The appraiser will also check for defects, holes, missing shingles, or sloppy repair work.

Attic

An assessment of an attic will include checks for ease of access, proper ventilation, structural integrity, pest activity, mold, mildew, water damage, and other debris or hazards.

Basem*nt

In the basem*nt, an appraiser will look for ease of access and signs of dampness and structural defects.

Mechanical Systems

An appraiser will assess the safety and working condition of the home’s mechanical systems – for example, its heating, cooling, ventilation, plumbing and electrical systems -- while also noting the need for repairs that are readily apparent.

Health and Safety Hazards

A property that contains any threat to physical health or safety, or any hazard that could impact the property’s structural soundness is unlikely to qualify for a VA loan. Red flags include the presence of radon gas, asbestos or lead-based paint within the home, or properties located in a flood zone, near a sinkhole, or proximity to any type of environmental contamination.

Termites & Pest Inspection

The presence of termites or other pests can bring serious damage to include structural issues. Appraisers will look for the presence of pests and must report any infestation, fungus growth or dry rot that could make the home less stable or put its occupants in harm’s way.

Common VA Appraisal Problems

For many potential buyers, the VA appraisal process can end with bad news: For one or more reasons, the property didn’t earn a passing grade. The two most common reasons for a property to fail a VA appraisal is that it doesn’t meet one or more of the VA’s Minimum Property Requirements or the appraiser’s valuation of the property was low enough that it isn’t worth what a buyer has offered to pay for it.

Depending on the reason for the appraisal’s failure, however, a buyer may still have options for landing the home and a VA loan.

For starters, if the home can’t meet one or more of the MPRs, you might request that the seller makes repairs or changes to the item(s) in question in order to bring the property up to VA standards.

If the appraiser’s valuation for the property is lower than what you have offered to pay, you will also have some options. First, you can pay the difference in cash between the appraiser’s valuation and the seller’s asking price, a figure known as the appraisal gap. This decision most likely means you will be paying more for the home than it is worth.

If paying cash to close the appraisal gap isn’t an option, you can ask the seller to lower the asking price so it is in line with the appraiser’s valuation and the property’s fair market value. If the seller agrees to the price decrease, the loan process can move forward.

One final option for working past a low valuation is to challenge the appraisal with the request for a Reconsideration of Value (ROV). To start this process, your real estate agent will provide market data to your lender showing the home is worth more than the appraiser’s valuation. VA personnel then review the appraiser’s valuation and the new data. If you can demonstrate that the property is worth more than the valuation, the VA will then issue an amended notice of value and the loan process can resume.

Compiling data for an ROV is one good example of why it’s a smart idea to work with a real estate agent when shopping for a home. Seek out agents who are familiar with the VA loan process and understand the standards of the VA’s Minimum Property Requirements. This type of experience might help you spot potential problem properties before you waste any time and money on the appraisal process.

VA Loan Appraisal Fees

As with most appraisals or inspections, the burden of cost belongs to the buyer. What’s more, VA appraisal fees are typically higher than appraisal fees for other loan types because the appraiser must know the VA’s distinct criteria. Expect to pay as much as $1,000 or more, depending on the location of and type of property.

VA Appraisal FAQs

VA Loan Appraisal Requirements [Updated for 2024] (2024)

FAQs

What are the red flags for VA loan appraisal? ›

Red flags include the presence of radon gas, asbestos or lead-based paint within the home, or properties located in a flood zone, near a sinkhole, or proximity to any type of environmental contamination.

What will not pass a VA appraisal? ›

Why do homes fail the VA appraisal? There are many reasons why a home may fail the VA appraisal. Common reasons include major issues with the foundation, roof, electrical systems, plumbing, and heating systems.

How strict are VA appraisals? ›

The VA appraisal is important to a lender. Properties that don't meet all VA criteria are rejected by the program and can put a lender at risk. In issuing a VA loan, a lender can choose to add any number of property restrictions. Some lenders are extremely strict, while others are more accommodating.

What will VA fail an inspection for? ›

Appraisers must note any damage caused by termites, wood-destroying insects, pest infestation, dry rot or any other defects that cause structural issues with the home. The appraiser must look for issues that could make the home less stable and/or put the occupants in harm's way.

What do VA appraisers look at? ›

Appraisers will look at recent comparable home sales, or “comps,” to help determine the property's value. VA appraisers look for at least three homes similar in size, age and location to the one you hope to buy.

How often do VA appraisals come in low? ›

VA home loan appraisals are similar to other types of appraisals in the sense that they sometimes come in lower than the buyer anticipates. It has been reported that only 8% of VA appraisals come back lower than expected but it does happen.

What will cause a VA loan to get disapproved? ›

Common Reasons VA Loans are Denied

Income outside the qualification range. High debt-to-income ratio. Inconsistent employment history. Other factors outside your control (e.g., a private mortgage lender choosing to reduce or end participation in the VA loan program)

Does VA ever waive an appraisal? ›

The seller cannot request a buyer with a VA loan to sign an appraisal waiver. Appraisal waivers cannot be used for VA or FHA loans. The VA buyer can cover the difference with cash at closing, but a lot of borrowers using VA loans are not in the position to do so.

How often do VA loans fall through? ›

For all purchases, according to Ellie Mae, 74.3 percent of VA loans closed, compared to 74.1 percent of all mortgages. Conventional (non-government did slightly better than VA, with a 75.2 percent closure rate. In short, VA mortgages will close at a high rate and are less likely than the average loan to fail to close.

How do I fight a low VA appraisal? ›

However, you still have one alternative: to appeal your VA appraisal. To do that, you simply ask your mortgage lender to submit a Reconsideration of Value (ROV) request to the VA. Of course, there's no guarantee that will make the difference you need. It could even make things worse by shrinking the appraisal figure.

How do I prepare my home for a VA appraisal? ›

Here are four tips to help you make sure your home will pass a VA appraisal.
  1. VA Appraisal Tip #1: Check the Comps. ...
  2. VA Appraisal Tip #2: Find an Experienced Real Estate Agent. ...
  3. VA Appraisal Tip #3 Understand VA MPRs. ...
  4. VA Appraisal Tip #4: Agree on a Reasonable Closing Timeline. ...
  5. Bonus Tip: Always Get a Home Inspection!

How long does a VA appraisal usually take? ›

Typically, a VA appraisal takes anywhere from one to two weeks to complete. Most areas can expect the appraisal process to take approximately 10 days. The VA does not mandate a strict timeline but offers a timeliness expectation based on the home's location and size.

Why wouldn't a house qualify for a VA loan? ›

At a minimum, the home must be safe, sound, and sanitary with a good foundation, structure, and roof. The appraiser will also look for basic requirements like clean water, heat, power, and no health hazards. Any home with pests, mold, rot, or broken windows will not pass muster.

Do VA appraisers go in crawl space? ›

Note: Fee appraisers are required to view, but not enter, any accessible crawl space and/or attic areas of the home and report any significant defective conditions observed.

Is a stove required for a VA loan? ›

Are appliances required on a VA loan? In general, the VA doesn't require specific appliances to be present for a home to qualify for a VA loan.

Which of the following is an example of a red flag on an appraisal? ›

In summary, the appraisal red flags are: - Property owner and seller are not the same. - Appraisal is dated after the sales contract. These red flags suggest potential conflicts of interest and raise concerns about the appraisal's objectivity and accuracy.

What happens if VA appraisal is lower than offer? ›

When the appraisal is lower than the asking price, the lender doesn't value the home as high as the seller. In such cases, your lender can submit a Reconsideration of Value (ROV) request to the VA.

What happens if a VA appraisal comes in high? ›

If A House Is Appraised Higher Than The Purchase Price

You're in a good situation if this happens. It simply means that you've agreed to pay the seller less than the home's market value. Your mortgage amount does not change because the selling price will not increase to meet the appraisal value.

How long does a VA appraiser have to complete an appraisal? ›

Typically, a VA appraisal takes anywhere from one to two weeks to complete. Most areas can expect the appraisal process to take approximately 10 days. The VA does not mandate a strict timeline but offers a timeliness expectation based on the home's location and size.

Top Articles
Latest Posts
Article information

Author: Fr. Dewey Fisher

Last Updated:

Views: 6077

Rating: 4.1 / 5 (42 voted)

Reviews: 89% of readers found this page helpful

Author information

Name: Fr. Dewey Fisher

Birthday: 1993-03-26

Address: 917 Hyun Views, Rogahnmouth, KY 91013-8827

Phone: +5938540192553

Job: Administration Developer

Hobby: Embroidery, Horseback riding, Juggling, Urban exploration, Skiing, Cycling, Handball

Introduction: My name is Fr. Dewey Fisher, I am a powerful, open, faithful, combative, spotless, faithful, fair person who loves writing and wants to share my knowledge and understanding with you.