Clarksville Homebuyer Guide

Part 3 of the 5-part series “VA Loans: 100 Questions Answered” by Kate Matties-Deiboldt, Sr. Mortgage Advisor serving Clarksville, Fort Campbell & Montgomery County.

Overview

This article covers property requirements, the appraisal process and the VA funding fee. Understanding these topics helps you select a home that meets VA guidelines in the Clarksville and Montgomery County market.

Questions 41-60

41. What types of properties can I purchase with a VA loan?

You can buy most one- to four-unit primary residences, including detached homes, townhomes and certain condos. Condos must be in a VA-approved project. Multi-unit properties (up to four units) are allowed if you occupy one unit as your primary residence. Investment properties and vacation homes are not eligible.

42. Can I buy a condo with a VA loan?

Yes, but the condo development must be VA-approved. The VA maintains a list of approved projects. If the project isn’t approved, your lender can help request approval, though it can take time.

43. Can I buy a manufactured or modular home with a VA loan?

It’s possible, but the home must meet specific VA and lender guidelines—including being permanently affixed to a foundation and classified as real property. Not all lenders finance manufactured homes, so check availability.

44. Can I buy a duplex, triplex or fourplex with a VA loan?

Yes. The VA allows you to buy up to four residential units as long as you occupy one unit. Rental income from the other units may even help you qualify, though guidelines vary by lender.

45. Can I buy land or a lot with a VA loan?

The VA loan is generally for homes ready for immediate occupancy, so land-only purchases are not eligible. You may be able to include a lot purchase as part of a construction-to-permanent VA loan, but these are less common.

46. Can I buy a farm with a VA loan?

Sometimes. The VA will finance properties with acreage and even small farms, but the value of the residence must be the primary component. Income from farming or commercial activity may not be considered for qualification.

47. What are the VA’s Minimum Property Requirements (MPRs)?

MPRs are guidelines ensuring a home is safe, sound and sanitary. The property must have adequate heating, electrical and plumbing systems; a roof in good condition; no lead-based paint hazards; and sufficient space for living, sleeping, cooking and sanitation. The VA appraisal addresses these items.

48. Is a home inspection required for VA loans?

The VA does not require a home inspection, but it is highly recommended. An inspection is a thorough evaluation of the property’s condition, whereas the VA appraisal focuses on property value and MPRs. An inspection helps you uncover defects and negotiate repairs.

49. What is a VA appraisal?

The VA appraisal estimates the home’s value and ensures it meets MPRs. A VA-approved appraiser will review market data, inspect the property and report findings. The appraisal protects both the borrower and the lender by confirming the home is worth the purchase price and is in acceptable condition.

50. What happens if the appraisal comes in lower than the purchase price?

If the appraised value is below the agreed purchase price, you have a few options:

• Renegotiate the price with the seller
• Pay the difference out of pocket
• Request a Reconsideration of Value (ROV) if you have data supporting a higher value
• Cancel the contract if your purchase agreement includes an appraisal contingency

51. What is a Tidewater Notice?

In certain situations, when the appraiser expects the value to come in low, they may issue a Tidewater Notice, giving the buyer and seller an opportunity to provide additional comparable sales before the final report is submitted. This helps ensure the appraiser has the most accurate data.

52. What is a Reconsideration of Value (ROV)?

An ROV is a formal request to have a VA appraiser consider additional comparable sales that may support a higher value. Your lender can submit the ROV along with sales data that was not included in the original appraisal.

53. Who pays for the VA appraisal?

The buyer typically pays for the appraisal as part of closing costs. Appraisal fees vary by location and property type but generally range from $500 to $750.

54. What is the VA funding fee?

The VA funding fee is a one-time fee charged by the Department of Veterans Affairs to help fund the loan program. It replaces monthly mortgage insurance and helps keep the program self-sustaining. The fee is expressed as a percentage of the loan amount and varies based on factors like down payment, whether it’s your first or subsequent use, and your service category.

55. How much is the VA funding fee?

For most first-time VA buyers with no down payment, the funding fee is 2.15% of the loan amount. If you put down 5% or more, the fee drops to 1.5%, and if you put down 10% or more, it drops to 1.25%. For repeat users with no down payment, the fee is 3.3%. (These percentages can change; check current rates when applying.)

56. Is the funding fee refundable?

The funding fee is generally non-refundable. However, if you become eligible for VA disability compensation after closing and your effective date is prior to your closing date, you may be able to request a refund of the fee.

57. Who is exempt from the funding fee?

Borrowers receiving VA disability compensation (or who are entitled but not yet receiving compensation) are exempt. Certain surviving spouses and Purple Heart recipients (active-duty) may also be exempt.

58. Can I finance the funding fee?

Yes. Most borrowers roll the funding fee into their loan amount. Financing the fee increases your loan balance slightly but avoids out-of-pocket cost at closing.

59. When is the funding fee paid?

The fee is collected at closing. If it’s being financed, it’s included in the total loan amount; otherwise, it’s part of the funds you bring to the settlement table.

60. Does paying the funding fee mean I pay more in monthly payments?

Financing the funding fee increases your loan balance, which slightly increases your monthly payment. If you pay the fee upfront, your payment will be lower. Discuss your cash position and goals with your lender to decide which option makes sense.

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About the Author: Kate Matties-Deiboldt is a Senior Mortgage Advisor and Branch Manager with VanDyk Mortgage (NMLS #18487), serving Clarksville, Fort Campbell, Montgomery County, and Middle Tennessee. She has 26+ years of experience helping military families, first-time buyers, and clients who’ve been told “no” before.