Home-buying on a budget can be especially complicated. You may be faced with making some concessions or crossing items off your “must-haves” in order to make your budget work. But what if you could find a home that meets all of your requirements for a fraction of the cost? Dream scenario right? Buying a foreclosed property might just be your method of finding a home that ticks every box including staying within budget.

But if you intend to use a VA Home Loan to buy a house does purchasing a foreclosed home affect your financing plans? Yes and no.

The VA has specific requirements for buying any home with VA Home Loan. This means you are confined to tighter parameters when it comes to your home search. The good news, though, is that the VA has little restriction on the type of primary residence that you buy as long as it is in good condition.

Therefore, can you buy a foreclosure with a VA Loan? The answer is yes if it is in good condition. So here are a few additional considerations to make when buying a foreclosed property.

What Are the VA’s Minimum Property Requirements?

In order to secure a VA Loan, you must meet the Department of Veterans Affairs guidelines. One guideline is that the intended home must undergo a VA appraisal. This appraisal assesses the quality of the home and ensures that the condition of the home meets all Minimum Property Requirements (MPRs).

There are many requirements but among the most notable are as follows. The roof of the home cannot have any major defects. All mechanical systems such as electrical and plumbing must be in working order without major wear and tear. Any broken windows must be repaired or replaced before approval. Lastly, any older home that has the potential to carry lead-based paint must be tested, scraped, and repainted.

These requirements seem straightforward in the sale of a home and likely wouldn’t see any issue in the sale of a typical home. But foreclosures typically see complications that a regular sale would not.

Common Foreclosure Complications

There is a reason that most foreclosed homes sell for a much lower price than they would in the regular housing market. This is typically because the bank, or whoever else owns the home, believes they cannot get the full market value for the home, or the home needs some repair and they are not willing to sink more money into the property. These issues may not be significant but they can be an issue if trying to purchase the property with a VA Loan.

For instance, many homes that are in foreclosure have not been kept in the best state. Previous owners who foresee a foreclosure don’t often keep up with maintaining the home or make necessary repairs. Additionally, if the home sat vacant for some time after the bank reclaimed ownership, the home has a higher likelihood of damage whether due to vandalism, weather exposure, or pest infestation.

In most cases, foreclosure sales have an addendum stating that the home is to be sold as-is, and therefore the seller will not complete any repairs before the sale. As you can imagine, this can pose an issue if the VA appraisal notes that repairs are necessary. This can hinder the purchase.

But not all foreclosed homes are in a distressed state and many may pass a VA appraisal. The key is to find a home that is move-in ready and has been fairly maintained.

Find a VA Loan Foreclosure Specialist

Buying a foreclosed home is an excellent way to buy your dream home while saving money. But finding the right home that meets the VA requirements can be an extensive task. The best way to accomplish this task is by working with an experienced real estate agent who not only understands foreclosures and short sales but who also understands the extra steps and requirements of working with a VA loan.

When working with a Desert Heroes team member, you get just that. We are all experienced real estate agents who understand that working with military families is different than working through the home-buying journey in the civilian world.

Call us today to partner with an experienced Desert Heroes agent.