A reader asks, "Does the VA have any regulations on the age of a house being purchased? We are looking at homes to buy, and are uncertain whether or not an older home (early 1920s) would be acceptable."
VA loan rules don't specifically reference the age of a home in terms of whether it would be acceptable for a VA mortgage or not. Instead, the real issue is whether it meets VA minimum property requirements, state and/or local building codes, and whether the property has what's known as "remaining economic life".
On that subject, VA loan rules say, "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."
How does the VA determine what the remaining economic life of the property might be? According to Chapter 11 of VA Pamphlet 26-7, the following applies:
"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."
It's clear that the physical age of a property could well play a part in its remaining economic life, but the age itself is not the only factor, nor is it the defining factor. There are many historic homes that are very old, yet well maintained and an important part of the communities they are in. Their economic life would be far different than that of a home that had not been well cared for or properly maintained.
Do you have questions about VA home loans or refinance loans? Ask us in the comments section.
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