First time buyer – I’m about to get out of the military. Can I use my VA benefits to help buy a home?

Answer – Yes, in fact you can get started o that process before you even leave the service. Click here to read about Pre-Discharge Services available thru the VA. In the case of a VA guaranteed home loan, the start that you can get its t apply for your VA Home Loan Certificate of Eligibility, which you will need to actually get the loan. That can save you some time in the process later.

The VA benefit that allows service members and veterans to buy homes with nothing down doesn’t come without some strings attached. Perhaps the most important one initially is that the home that you are going to try to buy has to qualify for VA financing. Sounds innocuous, but it may severely limit your choices. When a builder is developing a project one of the many paperwork issues that he has a choice to go through is a VA Certification. While this paperwork isn’t really onerous, it takes time that many builders just blew off when they were developing condo complexes and site condo subs.

A variation on the condo theme is the site condo, which is a Michigan invention that became popular in the mid 1980’s. Basically developers found in the mid-80’s that they could get through the Michigan’s approval process for condo developments in less than half the time and at less cost than going through a complete subdivision platting process. They decided that they could build homes that were a step beyond detached condos, but which would still fall under the State’s development rules for condos.

The idea of a site condo is that the owners own and are responsible for the little piece of land upon which their home sits and for the house itself (inside and out); but that the plot and house exist within a condo complex which also owns some common areas and requires that the homeowner be a member. Importantly, the “common areas” include the roads within the complex, plus any other areas like playgrounds or parks spaces or even the entrance to the complex (you’ve all seen the little entrance islands with the sub name on them – the association owns that, too). So, collectively, the owners are responsible for all of those things and for insuring those areas.

 For the most part a site condo development is so much like a typical plated subdivision that one can’t tell the difference; until it’s time to repair or replace the roads. In plated subs the roads are the responsibility of the local governmental body – the Township, Village or City. In a site condo complex, it’s the homeowners who are on the hook. That is one big reason to make sure that you check to see if the HOA is collecting and saving money for road repairs in your site-condo sub.

The other things that can be dramatically different are the rules that you may have to live under in a site condo sub. Some site condo HOA’s have very strict rules about what you can and cannot do to your property, especially on the outside. Some go so far as to have committees that must approve any exterior changes r additions and even what colors you can use on the exterior. If you can live with the restrictions that are impose by the site–condo HOA, then don’t buy there in the first place.

Finally, and most important for the VA buyer is that most site condo complexes build in the 80’s and 90’s and even in the early 2000’s were NOT VA certified. The builders just didn’t take the time to put in the paperwork. Your Realtor can check at the VA web site to see if a particular condo complex or site condo sub is certified or not. Here is a link to the VA site where that can be done – https://vip.vba.va.gov/portal/VBAH/VBAHome/condopudsearch . The VA also uses an appraisal process that is similar to the FHA process, in that the appraiser is also checking the house to see if there are any health hazards that need attention.

If the condo or site-condo complex that you are looking at is not VA certified, there is a process now in place to get it certified. It is not an easy process, nor quick (it takes 60-90 days), and it costs about $800. You can’t really do it all by yourself, but will have to have the cooperation of the Homeowners Association (HOA). Here is a link to the VA web site where the process is explained.  http://fhareview.com/va-approval-veterans-affairs-condo-approval/  You will have to really, really want that house in an unapproved sub to go through all that is involved in the process.

None of this should be a concern in regular platted subs, which is what almost all subs are anywhere else in the country except Michigan. It will apply to condo complexes anywhere in the country.

Keep in mind that when you exit the military, even if you have a good job lined up, you will have no work history in that new job and that will impact how the mortgage companies look at you as a risk. Talk to your mortgage rep about that. They may advise that you build up a year or two of post-military work history before you try to buy a house.

Good luck and, if you’re in the southeastern part of Michigan, give me a call. I’m a Viet Nam vet myself and love working with ex-servicemen and women, as well as first time buyers.