The VA Just Changed This Home Loan Inspection Rule

A pest inspection professional looks at termite damage.

Chris Birk is a columnist for Veterans United Home Loans

VA buyers everywhere can now pay for pest inspections to keep their loan moving forward.

Veterans buying homes in areas prone to termite infestation typically need a pest inspection to satisfy the VA's property condition guidelines, known as the Minimum Property Requirements. Over the years, only VA buyers in certain areas of the U.S. have been allowed to pay for the inspection. For everyone else, the seller or another party to the transaction had to cover this cost.

That distinction put some buyers at a disadvantage, especially in a competitive housing market where sellers were choosing between multiple offers.

Related: Read more about VA home loans

The VA loan program encourages buyers to negotiate with sellers regarding payment of the inspection fee and any repairs needed.

Other Department of Veterans Affairs loan news:

Space Force Guardians Can Now Use VA Home Loans

Current and discharged Space Force Guardians finally have liftoff for mortgages backed by the VA.

The VA loan program announced last month that its certificate of eligibility (COE) now includes members and former members of the U.S. Space Force. A COE proves veterans meet the length-of-service and character-of-service requirements to be eligible for a VA loan.

Lenders often get the COE for prospective buyers early in the loan process. A VA loan can't close without a COE in the file.

Guardians have closed on VA loans since the Space Force's creation, but their eligibility came from service in another branch, typically the Air Force. This update ensures service members who start their military careers in the Space Force can tap into this key benefit, which features no down-payment requirement and typically comes with the industry's lowest average rates for 30-year fixed-rate mortgages.

Surviving spouses of Space Force veterans may also have VA loan eligibility.

VA Application Share Rises Slightly

The VA share of all U.S. mortgage applications rose during the first week of July to 11.2% from 11.1% in the prior week, the Mortgage Bankers Association said in a July 13 report. On the purchase side, the VA share of applications was 11.8%, up from 11.5% the week prior. VA's share of refinance applications was at 9.7%, down from 10.2% the week before.

The combo of surging home prices and fast-rising interest rates has crimped demand year over year. The number of VA purchase applications in July's first week dropped 5.8%, compared to the same period a year ago, while refinance applications were down a whopping 80.9%, compared to last year.

Reader Question

"Our Chapter 7 bankruptcy was dismissed in November 2020. We are wanting to purchase a home through the VA and wondering how soon we can start looking and then apply for the VA loan." -- Leann C.

VA loans are one of the most forgiving mortgage options when it comes to bankruptcy, foreclosure and short sales. Veterans can close on a VA loan once they're two years removed from the discharge date of a Chapter 7 bankruptcy. It's possible to close on a VA loan just a year removed from filing a Chapter 13 bankruptcy.

With your November 2020 discharge, you might be able to close on a VA loan this November. You can start working on mortgage preapproval anytime. But lenders may need to re-pull your credit and get updated financial information if you're getting preapproved more than three months prior to a potential loan closing. Guidelines and policies can vary by lender.

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