How does a condo association get VA approved?
By OurHOA · General information · Revised
Why condos need VA approval before veterans can buy, what the VA reads in your governing documents, and the clauses that most often hold it up.
Why condos need it and PUDs usually don't
VA home loans are one of the best deals going for veterans and service members, often with no down payment, and a lot of them are shopping for condos near bases and in cities where a detached house is out of reach. The catch is that the VA's lender handbook requires a condominium project to be approved by the VA before any unit in it can secure a VA-guaranteed loan. Planned unit developments, the typical single-family HOA where you own your lot outright, generally do not go through that project-level approval, though the lender still looks at the HOA. So if your deed says condominium, your community is either on the VA's list or it is quietly turning away a whole category of buyers. Many boards have no idea which side they are on until a contract falls apart in escrow.
Start by checking the list
The VA publishes a searchable condo report through its Loan Guaranty site, and anyone can look a project up by name, city, or state. Search a few variations, because the listing usually uses the legal name from the declaration, not the friendly name on the entrance sign. Pay attention to the status, not just whether the name appears, since some listings carry conditions that a buyer's lender will have to satisfy. If you find nothing, that is not necessarily a red flag about the community. It usually just means no lender ever asked, because the VA process is mostly triggered by a buyer's loan rather than by the association applying on its own.
Who submits and what they send
In most cases a VA lender submits the request on behalf of a buyer, and these days the documents go in electronically through the VA's lender system. The association's job is to hand over the packet quickly and completely. The VA's handbook lists the declaration and any amendments, the bylaws, articles of incorporation if the association is incorporated, the plat or map, the current budget, a statement about any special assessments or litigation, and minutes from recent meetings, with development plans added for newer projects. The handbook also notes that an attorney's opinion confirming the documents meet VA requirements can speed up the review. If your manager or a board member keeps a clean, current copy of each of these in one folder, you can turn a lender request around in a day instead of three weeks.
What the VA actually reads for
FHA's condo review is heavy on financial ratios. The VA's review leans more on the legal documents, and the big question is whether anything in them interferes with the veteran's lender holding a solid first lien or with the owner's freedom to sell. The handbook calls for assessment liens to be subordinate to the VA-guaranteed mortgage, and it expects lenders to get the usual notice and consent rights on big decisions like dissolving the condominium or a major amendment. Some lender guides also list FHA-style benchmarks on reserves, delinquencies, and investor ownership, and lenders may have their own overlays, so ask the lender what they will be checking rather than assuming. Keeping delinquencies low and reserves funded will not hurt you with any lender.
Clauses that stall approval
The most common problem is a right of first refusal, a clause that lets the association or other owners match an offer or block a sale, because the VA treats it as a restraint on the owner's right to sell. Lender guides also flag lien provisions that try to put HOA assessments ahead of the first mortgage in ways that conflict with VA requirements, and unusual transfer restrictions or fees. Old declarations written in the 1970s and 80s are where these tend to hide, often in language nobody on the current board has ever read. The fix is usually an amendment, which means an owner vote at whatever threshold your documents require, so it pays to spot these before a buyer is waiting on the outcome. State law sometimes overrides a document provision on its own, which is another reason to run the language past association counsel first.
A few quirks and a practical plan
Not every condo is treated the same. In Michigan, the VA issued a circular in 2018 saying site condominiums, which are often detached homes on condo-style lots, would be processed like single-family homes rather than reviewed as condo projects. Timing estimates from lenders range from a few weeks to a few months depending on how fast the association responds and how messy the documents are. If your community is not on the list and you have units for sale near a military installation, it is worth having counsel read the declaration with VA requirements in mind, cleaning up any problem clauses at the next amendment cycle, and keeping the document packet current so the next VA buyer's lender can move fast. This is general background rather than legal or lending advice, and VA rules change, so confirm the current requirements with a VA-approved lender before you rely on any of it.
Sources
- VA Lender's Handbook, Chapter 16: Common Interest Communities, Condominiums and Planned Unit Developments (reference copy)
- VA Pamphlet 26-7, Chapter 16 (earlier edition)
- VA Circular 26-18-12: Michigan site condominiums
- Rocket Mortgage: what to know about buying a condo with a VA loan
- Inside Mortgage Finance: VA moves to electronic submission of condo project approval requests
These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.