What Would Make a VA Loan Fall Through?

Sharp looking multi-level suburban houseAre you considering a VA mortgage for your home purchase? Wondering if you'll need private mortgage insurance (PMI)? Well, here's the good news: VA mortgages generally do not require PMI, saving you monthly money.

However, there are specific eligibility requirements and other factors to consider.

This article will dive into the details and help you understand whether a VA mortgage requires PMI.

So, let's get started!

Key Takeaways

  • VA loans do not require private mortgage insurance (PMI).
  • PMI is typically required for conventional loans with a down payment of less than 20%.
  • The absence of PMI on VA loans results in significant savings for borrowers.
  • VA loans have a funding fee that offsets the absence of PMI.

Understanding the VA Appraisal Process for Home Loans

You should know that the VA appraisal process is essential in obtaining a VA home loan.

VA appraisals are done to determine the property's market value and ensure it meets the minimum property requirements. This includes checking for any significant repairs needed.

VA borrowers should be aware of the Tidewater initiative, which allows them to provide additional information if the appraisal comes in lower than expected.

Home inspections are also recommended, although they aren't required.

Typically, the borrower is responsible for covering the appraisal costs.

How the VA Loan Appraisal Differs from Conventional Financing

The VA loan appraisal process differs from conventional financing when determining the property's value. A VA appraiser who has received specialized training to assess properties for VA loan approval performs the appraisal for VA loans, unlike conventional loans. This appraisal is crucial in establishing the property value, which affects the loan amount, interest rates, and mortgage insurance requirements. The appraiser considers recent home sales (comps), property inspections, and potential repair costs.

VA Loan Appraisal Factors Impact on property value
Recent home sales (comps) Determines market value.
Property inspection assesses the condition and potential repair costs.
Interest rates It affects loan amount and affordability

Common Reasons Why Properties Fail the VA Appraisal

Common reasons why properties fail the VA appraisal include:

  • Issues with the property's condition, such as significant repair needs or safety hazards.
  • Discrepancies between the appraised value and the sales price

Here are some things to consider that may evoke an emotional response:

  • Safety hazards that could harm your family.
  • The disappointment of finding out your dream home needs significant repairs.
  • The frustration of dealing with discrepancies between the appraised value and the sales price

Red Flags That Can Lead to VA Appraisal Issues

If you notice any signs of significant damage or neglect during the inspection, it may raise concerns about potential VA appraisal issues. VA appraisals and home inspections serve different purposes in the homebuying process. While home inspections focus on the property's overall condition, VA appraisals are specifically conducted to determine the property's value and ensure it meets the VA's minimum property requirements. Understanding the differences between the two and knowing any red flags that could lead to appraisal issues is essential.

These factors can impact the VA appraisal process and potentially affect the loan closing. It's crucial to address any issues promptly and provide the necessary documentation to ensure a smooth appraisal process and receive the notice of value needed to proceed with the loan.

Tips for Buyers to Pass the VA Home Inspection Process

To pass the VA home inspection process, ensure you address any potential issues and provide the necessary documentation promptly. Here are some tips to help you navigate this process successfully:

  • Be proactive in identifying and fixing any problems with your property.
  • Gather all the necessary paperwork and documentation required for the inspection.
  • Communicate effectively with your inspector and provide any additional information they may need.

Following these tips will increase your chances of passing the VA home inspection and securing your VA loan without complications or delays.

Your Guide to the VA Appraisal Appeals and Reconsideration

Ensure you understand the process for filing a VA appraisal appeal or requesting a reconsideration if you disagree with the results. VA appraisals are an essential part of the VA loan process as they determine the value of the VA property. You can appeal or request a reconsideration if you believe the appraisal is inaccurate.

Strategies to Compete in Bidding When Using a VA Mortgage

When using a VA mortgage, you must know techniques to help you compete in bidding situations. Here are three methods to give you an edge:

  • Stay within your budget. Don't get caught up in the excitement and overspend. Stick with what you can afford.
  • Be prepared: Have all your paperwork in order and be ready to make a competitive offer quickly.
  • Work with an experienced real estate agent. They can guide you through the process and help you navigate the bidding war.

What Happens When a Home Fails the VA Appraisal Review?

If a home fails the VA appraisal review, you may need to consider other options for financing.

VA mortgages don't require private mortgage insurance (PMI), usually required for conventional loans with less than a 20% down payment.

However, if the home fails the VA appraisal review and you still want to proceed with the purchase, you might have to explore other financing options that do require PMI.

Options for VA Loan Buyers If the Home Doesn't Appraise

You might need to explore alternative financing options if the home you're interested in doesn't appraise for the VA loan. In such cases, here are three options to consider:

  • Negotiate with the seller to lower the purchase price to match the appraised value so you can still use VA financing.
  • Pay the difference between the appraised value and the purchase price out of pocket.
  • Walk away from the deal and find a different home that meets the VA loan requirements.


So, if you're considering a VA mortgage, remember that private mortgage insurance isn't required. This can save you thousands of dollars over the life of your loan.

Like a soldier who faces obstacles head-on, the VA loan program allows you to overcome the hurdle of mortgage insurance and quickly achieve homeownership.

It's a true victory for those who've served our country.


Recommended Reading

What Does Basic Entitlement Mean on a VA Loan?
How a VA Cash-Out Refinance Works: Complete Guide
How Do Mortgage Points Work on VA Loans?