Using VA Benefits to Purchase a Home and the Power of VA MPR Waivers.

Many veterans like to use their VA benefits to purchase a home.  This allows them to have the ability to purchase a home with no money down.  

The VA has what are called minimum property requirements in order for a home to qualify for a VA guaranteed loan.  These requirements have to do with safety, structural soundness and sanitation.  Examples of issues may include:  cracked or broken windows, chipped or peeling paint, holes in walls and doors, missing flooring and wood rot to name a few.

When the lender requests the appraisal, the VA appraiser is responsible for going out to the home to make sure that (1) the value is there and (2) whether or not the value will be subject to any repairs to the home.

So, what happens if the appraisal comes back with repairs required, but the owner/seller of the property is not financially or physically able to make these repairs?  Does this mean the veteran loses out on a home that he really wants to buy?  Is he or she out of any money they have spent on fees for getting the house inspected and appraised?  Both of these typically have to be paid for prior to being completed.

Fortunately, the answer is no.  This is where the VA MPR (minimum property requirement) Waiver comes into play.  This is a request that is made by the veteran to the lender to waive the specific repairs.

Example Scenario:  

The veteran is buying an older home, built in the 1980’s.  The owner of the home lives in a nursing home and does not have family members able to assist and is not financially able to hire anyone to make said repairs.  

The VA appraisal comes back with a subject to repairs of repairing the dry rot on the front door frame, the trim around the home being painted due to peeling and a slow drip leak in the hall bath sink.

At this point, the veteran submits a VA MPR Waiver to his or her lender requesting that these repairs not be made and provides the reasons why the request is being made.  The request cites the age and financial situation of the owner and that since none of these repairs indicate a safety issue, the veteran would like the required repairs to be removed from the Notice of Value (appraisal.)

If the lender agrees, the waiver will be submitted to the VA for review.  If approved, the VA staff will amend the Notice of Value to remove the repair requirements.  If the value of the required repair(s) are not material, there may be no change in value.  If the value of the repairs is material, the VA may reduce the Notice of Value by the contributory amount of the repair.

In this circumstance, the VA agreed that the repairs could be removed and no value change would be needed.

Key Takeaway

This is a valuable tool for any real estate agent, veteran or lender to keep on hand.  Although there is no guarantee that the VA is going to approve a VA MPR Waiver, it is something to keep in mind when a VA purchase may be in danger of not going through.