One common question about VA loan approval is whether the age of the home matters or not. Does the VA have standards about how old a home can be and still get VA loan approval?
The VA loan rule book does not specifically reference the age of a home--the important issue is whether the property, regardless of age, meets VA minimum property requirements, state and/or local building codes, and whether the property has what's known as "remaining economic life."
What does the rule book say about the requirements for "remaining economic life" of the property?
According to VA Pamphlet 26-7, "For VA Loan Guaranty purposes, the remaining economic life of the security must be at least as long as the loan repayment term. A short remaining economic life estimate must be supportable and not arbitrarily established. This is to avoid depriving veterans of the home of their choice in an area where they can afford to live."
A VA assigned fee appraiser is responsible for determining what the remaining economic life of the property is as part of the required appraisal process. Chapter 11 of VA Pamphlet 26-7 guides this process:
"In estimating remaining economic life, the appraiser must consider:
- the relationship between the property and the economic stability of the block, neighborhood, and community
- comparisons with homes in the same or similar areas
- the need for a home of the particular type being appraised
- the architectural design, style, and utility from a functional point of view
- the workmanship and durability of the construction, its physical condition and probable cost of maintenance and/or repair
- the extent to which other homes in the area are kept in repair, and in areas where rehabilitation and code enforcement are operating or under consideration, their expected results in improving the neighborhood for residential use."
Notice that in these rules, no mention of the actual physical age of a home is discussed--though it IS a factor that may play a part in its remaining economic life. That said, age is not the only factor OR the defining factor.
Borrowers may find historic homes that, while very old, are well maintained and an important part of the communities they are in; the remaining economic life for such properties would be different for any home that had not been properly maintained. For more information on this issue, contact the VA directly by calling 1-800 827-1000.