VA Loan Inspection Requirements & Appraisal Checklist

Key Takeaways:

• VA Appraisal Process: Once an offer is accepted, a VA-approved appraiser assesses the property’s value to determine how much a private lender will finance. This step is mandatory for all VA purchase loans.
• VA Appraisal vs. Home Inspection: A VA appraisal focuses on the property’s value and ensures it meets the VA’s Minimum Property Requirements (MPRs). In contrast, a home inspection provides a detailed report on the home’s condition and potential issues.
• Minimum Property Requirements (MPRs): The VA has set MPRs to ensure homes are safe, sanitary and structurally sound. These include working utilities, adequate roofing and proper sewage disposal, among others.
• After the Appraisal: The VA reviews the appraisal report and issues a Notice of Value (NOV). If the property meets the VA’s standards, the loan process continues; if not, necessary repairs must be made or the borrower may look for another property.
• Why Homes Fail VA Appraisals: Common reasons for why homes fail the VA appraisal include structural issues, safety hazards and non-compliance with local codes. Resolving identified issues or requesting a waiver can help move the purchase along.

VA Appraisal vs. Inspection

A VA appraisal should not be confused with a home inspection, as these are two different stages in the VA loan process. Not only that: VA appraisals are required for VA loans and home inspections are optional (but highly recommended).

The main goal of the VA appraisal is to assess the value of a home to ensure it meets the loan amount for a VA loan. The VA appraisal is also meant to ensure that the property meets all of the Minimum Property Requirements (MPRs) established by the Department of Veterans Affairs. We’ll discuss the MPRs in depth below. 

A VA home inspection is a more thorough inspection of home systems. It aims to provide a detailed report on the home’s condition, listing any current or potential problems. Although the VA does not require it, it is highly recommended. 

Homes are often the biggest purchases one makes, so it’s best to be fully aware of what you’re getting into and prepared for any potential repair costs in the near future. For example, if you were to buy a home without an inspection and learn, down the road, that it needed new siding all along, you could be looking at a heavy repair bill that a home inspection may have caught and informed you about upfront.

The table below highlights the primary differences between a VA appraisal and a home inspection:

VA Minimum Property Requirements 

The Department of Veterans Affairs implements a set of minimum property requirements (MPRs) to ensure that homes financed by VA loans are safe, structurally sound and sanitary investments for veterans and military families.

During the VA appraisal, the appraiser will evaluate the property, ensuring it meets all applicable MPRs. Notable MPRs to keep in mind include:

• Working electric, heating and cooling systems
• Adequate roofing
• Sufficient sizing for basic living necessities
• Clean, continuous water supply
• Sanitary facilities
• Free of lead-based paint
• The absence of wood-destroying insects, fungus, and dry rot
• Safe and sanitary sewage disposal
• Accessibility from an all-weather public or private street
• Attics and crawl spaces must be accessible and properly vented

These requirements cover various aspects of location, infrastructure, and safety and are designed to create a secure environment for homeowners. The VA appraisal checklist provides a complete list of VA MPRs below.

The VA will not approve the loan if a home does not meet these MPRs. However, in some cases, the VA may consider waiving MPR repairs or permitting the borrower to address the repairs after the loan closes. We discuss this option in detail below. 

How often do homes fail a VA appraisal?

Passing the VA appraisal depends on the property’s condition and adherence to the VA’s MPRs. Properties that are well-maintained, safe and in overall good condition typically pass smoothly. However, significant issues like structural damage, safety hazards or major defects can pose challenges, often requiring repairs or remediation to meet the standards.

The VA appraisal’s primary objective is to ensure the property is safe and suitable for the borrower. Though it may present some requirements and challenges, its purpose is to protect the homebuyer’s interests.

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What will fail a VA appraisal?

A VA appraisal may fail if the property does not meet the VA’s MPRs. Some common reasons for a failed VA appraisal include the following:

• Structural issues: Significant structural problems, such as foundation issues, severe cracks or unstable construction, can result in a failed appraisal.
• Safety hazards: Safety hazards, such as faulty electrical systems, unsafe stairways or inadequate smoke detectors, can lead to a failed appraisal.
• Sanitary concerns: Issues with water supply, sewage disposal or sanitation facilities can cause a failed appraisal. This includes problems with the water source, plumbing or improper sewage disposal systems.
• Major defects: Any significant defects that affect the property’s habitability, soundness or value can result in a failed appraisal. This may include issues like extensive water damage, mold or significant pest infestations.
• Non-compliance with local building codes: The property may fail the VA appraisal if it does not meet the local building codes or zoning requirements.

VA Appraisal Checklist

Property Access

• The property must have access from a public or private street with an all-weather surface.
• Private streets must have a permanent easement and be maintained by an HOA or joint maintenance agreement.
• Each living unit must have independent access without trespassing on adjoining properties.
• The rear yard must have independent access without passing through any other living unit.
• There must be adequate space between buildings for exterior wall maintenance.

Property Characteristics

• The property must be a single, readily marketable real estate entity.
• The primary use of the property must be residential.
• Non-residential use must not exceed 25% of the total gross floor area.
• Each unit must have suitable living, sleeping, cooking and dining facilities.
• Shared laundry, storage and heating facilities are allowed in 2- to 4-unit buildings.
• Utilities (water, sewer, gas, electricity) must be independent for each unit.

Mechanical Systems

• Mechanical systems must be safe, protected from destructive elements and of adequate capacity and quality.
• Heat must be adequate for healthful and comfortable living conditions.
• Wood-burning stoves must have a conventional system to maintain at least a 50-degree temperature in plumbing areas.
• Solar systems must have a backup system that provides equivalent utility.
• Unvented space heaters and fireplaces must meet additional VA or LAPP Lender requirements.
• Each unit must have adequate electricity for lighting and necessary equipment.

Water and Wells

• Each unit must have a continuing supply of potable water and domestic hot water.
• Connection to public water is required whenever feasible.
• Water quality must meet local health authority or EPA guidelines.
• Shared wells must be capable of producing adequate water for each property simultaneously.
• Permanent easements and well-sharing agreements are required for shared wells.
• Community wells must meet health department approval.
• Approved cisterns are accepted when public water is not available.

Sanitary Facilities and Sewage

• Each unit must have sanitary facilities and a safe method of sewage disposal.
• Connection to the public sewer is required whenever feasible.
• Individual and community sewage disposal systems must operate properly.
• Pit privies are permitted if customary and installed according to local health authority requirements.

Roof and Ventilation

• The roof must prevent moisture entry and have at least five years of remaining useful life.
• Adequate natural ventilation is required in attics and crawl spaces.
• Crawl spaces must have proper access and ventilation and be clear of debris.
• Floor joists in crawl spaces must allow access for maintenance and repairs.

Defective Conditions

• Conditions impairing safety, sanitation or structural soundness must be corrected.
• This includes defective construction, poor workmanship, excessive dampness, leakage, decay, settlement, termites and other issues.
• Lead-based paint must be corrected on homes built prior to 1978.

Hazards

• The property must be free of hazards that may affect health, safety or the customary use and enjoyment of the property.
  • Hazards include subsidence, flood, erosion and proximity to high-voltage electric transmission lines and gas or petroleum pipelines.

Other Requirements and Considerations

• • The property’s boundary must remain free from encroachments, including improvements, utility easements or rights-of-way.
  • The property must be compliant with local zoning ordinances and building codes.
  • The property must be compliant with local housing and planning authority code enforcement.
  • All units must have access to safe drinking water, sewer, gas and electricity.
  • Each unit must have an appropriate water supply, sanitary facilities and sewage disposal.
  • For modular homes: Compliance with special modular home requirements.

• Pools: Pools must be in good working order and can’t have any defects or pose any hazards.

• Proximity to airports: If the home is near an airport, the appraiser will assess whether this proximity poses any concerns for the home’s livability, safety and fair market value.

• Mineral rights: Mineral rights can impact the VA appraisal process, as they affect the home’s value and who has access to the property.

What happens if a VA appraisal fails?

Suppose the VA appraisal determines that the property does not meet the VA’s MPRs. In that case, the property is not considered safe, structurally sound or sanitary enough to qualify for a VA loan. The VA will only approve the loan on that property if the issues identified in the appraisal report are resolved.

The borrower has a few options when the VA appraisal fails:

1. The property owner can agree to make the necessary repairs to bring the property up to the VA’s MPRs. A reinspection will be conducted once the repairs are completed to ensure compliance.
2. The borrower can request a waiver of the MPR repairs from the VA if the property is deemed safe, structurally sound and sanitary enough to be occupied despite failing the appraisal. 

The lender and the VA must agree to the waiver, and providing additional documentation to support the request is often helpful. This can include repair estimates from licensed contractors, inspection reports from other licensed inspectors or explanatory letters that support the property’s condition despite not meeting all MPRs.

1. The borrower may look for another property that meets the VA’s MPRs.

Low Appraisal Value

If your appraisal comes in low, you have options:

First, the VA Tidewater process automatically kicks in. This process involves incorporating more data into the appraiser’s review to see if this helps raise the appraised value. This process is handled between the lender and the appraiser. 

If it doesn’t, you can move on to the additional options below. 

Ask for a Reconsideration of Value (ROV) from the VA. An ROV is initiated by the borrower and is a formal process of appealing a low VA appraisal after the appraiser makes their determination.

Once an ROV is filed, the VA will review the submitted evidence, including comparable sales data, additional property information or corrections to the original appraisal. If the VA finds the new evidence compelling, they may adjust the appraised value. If not, the original appraisal value will stand. 

This process helps ensure the property value reflects accurate and up-to-date market conditions. A reconsideration isn’t always effective, and negotiating with the seller may be a better option. However, some sellers may not want to lower the purchase price in a competitive market.

Check out our guide to VA Tidewater and ROVs to learn more.

Ask the seller to lower the sales price. If the VA appraisal comes in lower than the sales price, one option is to ask the seller to reduce the price to match the appraised value. This approach is beneficial because it allows the buyer to proceed with the purchase without needing additional funds and gets the buyer a better price. 

The process involves negotiating with the seller and providing the appraisal report as evidence of the home’s current market value. Many sellers may be willing to lower the price to ensure the sale goes through, especially if the property has been on the market for a while. However, in a seller’s market, where demand is higher than supply, the seller often has the upper hand and may not be willing to lower the price. 

Pay the difference. Another option is for the buyer to pay the difference between the appraised value and the sale price out of pocket. This can be a good solution for buyers who are set on purchasing the property and have the financial means to cover the gap. 

The process involves arranging the additional funds from savings or a secondary loan and proceeding with the original sales agreement. This ensures the VA loan can still be used but requires careful consideration of the financial impact.

Walk away from the sale. The buyer can always walk away from the sale if the first three options aren’t feasible. This option protects the buyer from overpaying for a property that doesn’t meet the appraised value. The process involves terminating the purchase agreement, usually within the contingencies outlined in the contract. 

While this might be disappointing, it allows the buyer to keep shopping and, ideally, find a property that meets their needs and the VA loan requirements without financial strain.

Frequently Asked Questions

When should I have my home inspection done?

It’s recommended that you have your future home inspected done as soon as you are under contract to purchase a home. This typically occurs during the due diligence period, which is often within the first 10 days after the seller accepts your offer.

When should I have my VA appraisal done?

Your lender should order the VA appraisal soon after you go under contract to purchase a home. The timing is crucial because the appraisal must be completed before the loan can be approved and closed. 

When do I have to pay the VA appraisal fee?

The VA appraisal fee is typically paid upfront when the appraisal is ordered. The buyer is responsible for this fee, which is usually paid directly to the VA-approved appraiser or through your lender as part of the loan application process.

What does the VA appraisal timeline look like?

The VA appraisal process usually takes 7 to 10 days from when the appraisal is ordered to when the report is completed. The timeline can vary based on the location and the availability of VA-approved appraisers. Here’s a brief overview of the process:

1. Order the Appraisal: Your lender orders the VA appraisal shortly after you go under contract.
2. Appraiser Visits the Property: The VA-approved appraiser schedules a visit to the property to assess its value and ensure it meets the VA’s MPRs.
3. Appraisal Report: The appraiser completes the report, including the property’s estimated market value and notes on any MPR issues.
4. Review and Decision: The lender reviews the appraisal report. The loan process continues if the property meets the MPRs and the value is sufficient. If there are issues, the buyer and seller may need to address them before moving forward.

What’s the difference between a VA Appraisal and a Conventional Appraisal?

VA appraisals are similar to conventional appraisals, as both aim to determine the home’s fair market value to justify the loan amount. In both cases, the appraiser visits the house, checks for major issues, compares it to similar properties sold recently and provides a report.

The key difference is that VA appraisals follow the VA’s Minimum Property Requirements (MPRs), which can result in a pass/fail outcome. However, as long as the property is well-maintained, it’s rare for a VA appraisal to fail. 

Unlike VA appraisals, conventional appraisals don’t have a pass/fail outcome; they simply establish the value. Whereas when a VA appraisal fails, a lender will not approve the necessary funding. 

More Reading

Guide to VA Appraisal Fees and Process

A Guide to the VA Funding Fee in 2024

VA Loan Closing Costs – What to Expect

VA Loan Calculator

About Post Author

Ryan Guina

Ryan Guina is The Military Wallet’s founder. He is a writer, small business owner, and entrepreneur. He served over six years on active duty in the USAF and is a current member of the Tennessee Air National Guard.

Ryan started The Military Wallet in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then.

Featured In: Ryan’s writing has been featured in the following publications: Forbes, Military.com, US News & World Report, Yahoo Finance, Reserve & National Guard Magazine (print and online editions), Military Influencer Magazine, Cash Money Life, The Military Guide, USAA, Go Banking Rates, and many other publications.

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