Why is it Difficult to Find VA Approved Condos in Orange County?

va approved condo for sale

Why is it difficult to find VA approved condos in Orange County, CA? There are plenty of Veterans in Orange County who want to take advantage of the VA loan program, especially now that there are no more loan limits for ZERO Down VA financing. But trying to narrow down the search for those condos that are VA approved, meaning they are eligible for VA financing, is no easy feat.

First, it's important to understand the difference between a condo and a Single Family Detached home. In Orange County it is not always as easy as just looking at the property and knowing if it is a condo or an SFR. Most people assume that all condos are attached properties on at least one wall, tend to be smaller homes, and have a monthly Home Owners Association (HOA) payment. And they also assume an SFR (Single Family Residence) will be a detached property, larger home, and not have an HOA payment. But this is not always the case.

Condos that Look Like SFR's

While some condos look like a stereotypical condo, some do not. Many times, especially in the last 10 to 20 years, builders have developed and built detached home projects that are legally condos in an effort to achieve more "density" in the project, meaning, build more homes on the parcel of land. The homes are detached. They look and feel like a Single Family Detached home, or even a Planned Unit Development (PUD), but legally they are a condo.

Orange County VA Approved Condos

Single Family Homes that Look Like Condos

And then there are the home projects that look like condos but are legally SFR's.  These properties are attached and have HOA dues. Typically they are older projects. You'll run into these in all areas of Orange County.

Full Proof Way to Know if a Property is a Condo

There is a full proof way to know if a property is a condo. Check out the Assessors Parcel Number, or APN. In Orange County, if the APN begins with a "9", then the property is a condo. A lender or real estate agent will be able to look up the APN number, but as a consumer you can typically find it in the property listing information. For example, Redfin.com lists the APN number in the "Public Facts" section of the property page. Zillow shows it in the "Other" section lumped together with about 50 "other" details. A little harder to find. Realtor.com shows the APN in the "Other Property info" section. 

While many of the listing sites may identify a property as a "condo" or a "SFR", there are times when the information is incorrect. The agent entering the information didn't realize the significant difference in financing possibilities based on the legal property type, so knowing the rule of "9" is important. And if the APN does not begin with a 9 then your are good to go with your VA loan. But if there is a 9 and the property is a condo, then you will need to narrow down your search a little bit more, because to get a VA loan on a condo, the condo project needs to be VA approved.So how do you figure out which condos are VA approved and which are not?

Finding VA Approved Condos

If you are a Veteran looking to buy a condo using the VA loan program, then you are not going to want to waste your time looking at condos that are not VA approved. You can find a real estate agent who can help with your search. Or, you can go straight to a website built specifically for finding Orange County VA approved condos. There are two websites in Orange County, CA that will drastically narrow down the search for VA approved condos, saving lots of time, energy, and frustration. 

www.OrangeCountyVeteransHomes.com

www.OrangeCountyVeteransHomes.com has links for just about every city in Orange County. Just click on the link for the city you are interested in and "bam", you are presented with a list of VA approved condos for sale. They are listed in order of purchase price. Any Veteran who has spent any amount of time looking at condos only to find that a property they fell in love with is not VA approved will appreciate the this website. And while it is still important to have a local Orange County VA Loan Officer who is familiar with Orange County VA approved condos double check a properties eligibility before you make an offer, just knowing you are not wasting your time looking at condos that are not VA approved is a big time saver.

Fully Underwritten PreApproval

The first step in any home search should always be a consultation with a lender. For those using the VA loan program, working with a local, Direct VA Lender who is purely focused on the VA loan program and also knows the in's and out's of VA condo lending can help make the whole home buying process a smooth process. Your VA lender should be available to answer your questions and should be quick to present your loan options in an easy to understand way. And most importantly, it can be critical to understand the difference between being "Prequalified", "PreApproved", and Fully Underwritten and PreApproved. If your lender issued your PreApproval letter 1 hour after running your credit and getting a "DU", then you probably do not have an "underwritten" VA PreApproval. VA loans fall apart all the time when the Veteran thought they were PreApproved. Unless an actual Direct Endorsed VA Underwriter has reviewed your loan package, then you are still at risk of having a rocky loan process once your offer is accepted. The best recommendation that can be given to a Veteran early in the home search process is to get your VA loan fully underwritten and approved. This not only will give you peace of mind, but will also make any offer you make solid gold to the seller. A fully underwritten and PreApproved offer is as good as a cash offer and will make it easy to close very quickly. 

Authored by Tim Storm, an Orange County, CA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at Fairway Independent Mortgage Corporation NMLS #2289. My direct line is 714-478-3049. I will prepare custom VA loan scenarios that will be matched up to your financial goals, both long and short-term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.

No VA Loan Limits in 2020

No VA loan limits in 2020? You heard that right. The VA loan limits for 100% financing have been eliminated effective January 1, 2020. For high priced neighborhoods in Orange County this will have a dramatic affect for Veterans trying to buy a home. Veterans buying homes in Riverside and San Bernardino counties will also benefit greatly. 

How VA Loan Limits Worked in 2019

Previously, the Veterans Administration would announce the upcoming 100% financing loan limit for each county in late November of the preceding year. Most recently the 2019 100% financing loan limit for Orange County was $726,525. This meant an Orange County Veteran could buy a home for a price as high as $726,525 with no down payment. (just don't forget about closing costs which do have to be paid). If the price was above $726,525 then the Veteran was required to come in with a down payment equal to 25% of the difference between the 100% loan limit and the purchase price. For example, if the purchase price was $1,000,000 then the down payment would be $68,368 (25% of the difference between $1,000,000 and $726,525). The VA loan would be $931,631 (before financing the VA Funding Fee, if applicable). Now, in 2020, no down payment is required.

Buy a $1,000,000 Orange County Home with $0 Down Payment

An Orange County Veteran purchasing a $1,000,000 property in Orange County now would not need any down payment.For that matter, the Veteran could buy a $2,000,000 with no down payment as long as they had enough income to qualify for the payment. 

What You Need to Know Before Buy

There are things every Veteran should know before they buy a home. Really, they should know these things before they even think about making an offer on a home. Many times there is a big disconnect between the payment the Veteran is comfortable and the price of range homes they wish to purchase. Understanding the numbers involved in a purchase is critical in order to avoid frustration and potential financial disaster. Here are just a few of things to be aware of before looking at homes and getting your hopes up.

  • Know you own budget. What is your net income after taxes? How much do you spend on meals and entertainment? How much is spent on car payments, student loans, other installment loans? Are you carrying credit card debt? Hopefully you have positive cash flow, or at least know exactly what it will take to have positive cash flow.
  • Know what makes up a mortgage payment. It's not just Principal and Interest. The full mortgage payment also includes property taxes (can be anywhere from 1% to 2% of the purchase price divided by 12), home owners insurance (estimate using .25% of the loan amount divided by 12 - but you will shop for your homeowners insurance), and possibly Homeowners Association Dues if you purchase a condo or home in a PUD (Planned Unit Development).
  • Know what payment your are comfortable with and that will fit in your budget. If you are pushing your budget, are you expecting a raise in the near future that will lessen the burden?
  • Know that there are closing costs involved in a home purchase, even when using VA financing. Just like any home purchase, there will be escrow/settlement fees, title insurance, a VA appraisal fee, recording fees to the county, lender fees, inspection fees, notary, etc. Also, there will be "prepaid" expenses which include prepayment of property taxes, insurance. and mortgage interest. These are buyer costs. The seller will also have their own costs. Having a solid estimate of all the costs and fees involved is important in order to make sure you are not short to close when your closing date arrives. If you do not have money for closing costs or wish to keep you money in the bank, then you can negotiate upfront to have the seller pay some or all of your costs. This may put you at a disadvantage against other potential home buyers not needing the seller to pay closing costs but can put you in a good position with reserves in the bank after closing.

How to Get a Solid Estimate of the Numbers Involved in a Home Purchase

The best way to get an estimate of all the numbers involved in a VA home purchase is to work with an experienced VA Lending Expert. Ask for a VA Total Cost Analysis, which is prepared as part of the initial Pre-qualification process.The VA Total Cost Analysis will show you several "VA purchase scenarios" based on your preferred price range and payment comfort level. It will give you complete breakdown of payment for each home price as well as a breakdown of the costs involved in buying a home at each price.The TCA is delivered on a personalized web page and can be easily adjusted based on a specific property. 

VA Loan PreApproval

The definition of a PreApproval varies from one lender to the next. Some lenders may just have the Loan Officer review you income documentation, run credit, and get an Automated Approval. Some lenders may not even do that much. There are some big online lenders who issue a PreApproval letter based on the initial borrower completed loan application without any review of the documentation. But in either of these situations, the final decision maker, the VA Underwriter, may have a different opinion of the loan package than the initial review by the loan officer. For this reason, you should ask for a "Fully Underwritten PreApproval".With a Fully Underwritten PreApproval your loan package is reviewed and Approved (or not) by an actual VA Underwriter. This is like walking into a car dealership with a check from your bank. Your financing is in place, provided the property meets VA requirements. This not only takes a lot of the stress out of the home buying process but also make your offer stand out among other competing "Prequalified" offers. 

Authored by Tim Storm, an Orange County, CA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at Fairway Independent Mortgage Corporation. My direct line is 714-478-3049. I will prepare custom VA loan scenarios that will be matched up to your financial goals, both long and short-term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process. 

How the Blue Water Navy Veterans Act of 2019 Affects California VA Loans

The Blue Water Navy Veterans Act of 2019 brought about significant changes to the VA loan program that Orange County, CA Veterans should be aware of. The two biggest changes are the elimination of the 100% financing loan limit and the increase in VA Funding Fees. 

Was there ever a VA Loan Limit in California?

There has always been confusion in regards to the VA loan limits. Technically, there was not a maximum VA loan amount prior to 2020. But there was a limit for No Down Payment VA loans. And since No Down payment is one of the best benefits of the VA loan, the 100% loan limit is something that Orange County Veterans have always needed to be aware of. In 2019 the 100% financing VA loan limit was $726,525. 

An Orange County Veteran could buy a VA approved condo in Ladera Ranch for $726,525 and not need a down payment. But if that same Veteran was looking at a home in Newport Beach for $1,200,000, a down payment would be needed. The down payment was calculated using 25% of the difference between the purchase price and the loan limit of $726,525. In this case, 25% of the difference between $1,200,000 and $726,525 is $118,368. The VA loan would be $1,081,631. Now, in 2020, a Veteran buying an Orange County home above $726,525 will not need a down payment. So a Veteran buying a VA approved condo in Irvine for $1,000,000 will not need any down payment. And yes, there are VA approved condos in Irvine valued at over $1,000,000.

VA Funding Fee Changes for 2020

VA Funding Fees will be increasing in 2020. Below is a chart showing the previous Funding Fee's compared to the new Funding Fee's required on a VA home loan. 

VA Loan Type

Down Payment

Funding Fee

First Time Use

Funding Fee

Subsequent Use

Purchase

0%

2.3%

3.6%

Purchase

5% to 9.99%

1.65%

1.65%

Purchase

10% or more

1.4%

1.4%

Cashout Refinance

N/A

2.3%

3.6%

VA Streamline

(IRRRL)

N/A

.5%

.5%

What is the VA Funding Fee?

The VA Funding Fee is required on all VA loans by law. There are some Veterans who have an exemption based on having a service connected disability rating through VA. The Funding Fee is used to help VA guaranty the VA loan program. The guaranty is the reason why the VA loan program is able to allow for 100% financing and not have a monthly mortgage insurance payment, like all other loan programs that allow financing above 80% of the property value. As shown in the chart above, the Funding Fee does go lower if the Veteran has either 5% or 10% for down payment. As part of the Blue Water Navy Veterans Act of 2019, Active Duty Military personnel who have received a Purple Heart will also be exempt from the Funding Fee.

FAQ on VA loans

Who Pays the VA Funding Fee?

The VA Funding Fee is paid by the Veteran, but is not an "out of pocket" expense. Depending on the Veterans preference, in most cases the Funding Fee is financed into the base VA loan amount. Below are the three ways the Funding Fee can be paid.

  • Financed into the VA loan (this is the most common method)
  • Paid out of pocket by the Veteran
  • Paid by the seller of the home the Veteran is purchasing

If the Funding Fee is financed into the loan, the VA loan will be higher than the purchase price of the home. For example, if an Orange County Veteran buys a home is Laguna Niguel for $500,000 with a no down payment VA loan and this is their first time using the VA loan program, the Funding Fee will be 2.3%. To calculate the new loan amount, multiply 2.3% by $500,000 to get $11,500. Add $11,500 to $500,000 for a total VA loan of $511,500. The mortgage payment is based on the full loan amount of $511,500. 

If you are interested in finding out what the numbers look like in your situation, contact a local Orange County VA loan specialist who will prepare a VA Total Cost Analysis. This will give you a clear and easy to understand break down of the numbers, helping you to make the right decision when it comes to your new homes financing.

Authored by Tim Storm, an Orange County, CA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at Fairway Independent Mortgage Corporation. My direct line is 714-478-3049. I will prepare custom VA loan scenarios that will be matched up to your financial goals, both long and short-term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process

How to Buy a Condo in Orange County with a VA Loan

Are you looking to buy a Condo in Orange County, CA with a VA loan? There are things you need to know before starting the condo search that will help speed up the search process and relieve the potential frustration of finding out the condo you fell in love with is not eligible for a VA loan. The most important thing to know right out of the gate is that if you are using VA financing to purchase a condo, the condo project needs to be VA approved. And while it is possible to get a condo project VA approved after you have identified the condo you want to buy, it will be far easier to just limit your property search to only those condos that are in a VA approved condo project. But how do you do that?

Two Ways to Search for VA approved Condos

There are two common methods used by Veterans and their real estate agents in searching for a VA approved condo. The most common method is to just look at ALL condos for sale and narrow down the search to the condos the Veteran is most interested in buying. Typically the search will be based on price range, bedrooms, bathrooms, size, location, etc. After filtering through 100’s of properties, anywhere from 3 to 30 properties may be identified as potential condos to buy. Then comes the frustrating part. Looking up each condo to see if it is eligible for VA financing. Since most condos in Orange County, CA are not VA approved, finding out that most of the homes are not even eligible for a VA loan is not only frustrating but a huge waste of time.

The far easier method is to only look at condos that are located within VA approved condo projects. And this is where it makes sense to work with real estate professionals who are familiar with the VA loan program and understand how to limit the search to only those properties eligible for a VA loan. The real estate agent can search the Multiple Listing Service (MLS) based on a narrowed down search of legal “Tract” numbers. The resulting properties are then forwarded to the Veteran, saving a ton of time (and frustration).

Another option for Veterans who want to do some searching on their own is to use a local VA Condo search website specific to Orange County.  www.OrangeCountyVeteransHomes.com has done most of the legwork for you. There is a link for each city within Orange County. Simply click on the link and Bam, it’s done.  For example, let’s say you are looking for VA approved condos in Irvine. By clicking on the Irvine link, a list of VA approved condos in Irvine will appear. As of today (Nov 19, 2020), there are 49 VA approved condos for sale with prices as low as $305,000 and as high as $1,030,000. A quick search for VA approved condos in Huntington Beach shows there are currently 20 properties for sale with prices ranging from $279,000 up to $800,000.

It is important to have an experienced Orange County VA loan specialist double-check the VA website to make sure the condo project is verified as approved because sometimes a condo project can run into financial issues or a lawsuit that can jeopardize their approval.

Buy VA Condo with $0 Down with No Limit in 2020

In 2020 VA will do away with loan limits for 100% financing. In the past, a Veteran would buy a home with ZERO down payment but only up to the county limit. In Orange County in 2019 the 100% financing loan limit was (is) $726,525. It was possible to buy a property and get a VA loan above that limit, but only with a down payment. Now, as a result of the “Blue Water Navy Veterans Act”, loan limits have been eliminated. This means that those high priced condos in Irvine and Huntington Beach, along with other upper-end areas of Orange County, a Veteran can buy with No Down payment.

First Step in the Home Buying Process –VA Loan PreApproval

The first step in every home buying process should always be PreApproval. The last thing you want is to spend time finding the right property and then not be ready to make an offer. Most sellers will not accept an offer from a potential buyer who hasn’t talked to a lender yet and have a PreApproval letter in hand. With VA, it is important to work with a lender who specializes in VA. It is a unique program and working with a local Orange County Loan Officer who specializes in the VA loan program will help to make the overall process seamless. The VA Loan Officer will be able to pull the VA Certificate of Eligibility (you always want to make sure eligibility is clear before an offer is accepted), along with providing a Side by Side VA Total Cost Analysis (VA TCA). The VA TCA will give the Orange County Veteran a thorough breakdown of the numbers, making it easy to compare different options and price ranges.

Authored by Tim Storm, an Orange County, CA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at Fairway Independent Mortgage Corporation. My direct line is 714-478-3049. I will prepare custom VA loan scenarios that will be matched up to your financial goals, both long and short-term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process

VA Loan Limits for Orange County, CA to be Eliminated in 2020

VA loan limits for Orange County, CA will be eliminated as of January 1, 2020. This is a big change from what has historically been a limit on Veterans’ ability to purchase a home in Orange County with no down payment. With VA loan limits in California eliminated, usage of the VA loan program should increase significantly.

How have the VA Loan Limits Been Set in Orange County?

Every N0vember, Federal Housing Finance Agency (FHFA) announces the Conforming Loan Limits for each county in the United States. The basic Conforming Loan Limit in 2019 for all counties in the United States was $484,350. But for counties where home prices are above the national averages, like in Orange County, the “High Balance Conforming” limit was set at $726,525. There were also many counties in California with limits set above $484,350 all the way up to $726,525. It just depends on the average sales price of homes in that county.

VA followed suit and set the Zero Down 100% financing VA loan limits to be equal to the Conforming (or High Balance Conforming) loan limit set by FHFA. So in Orange County in 2019 a Veteran could buy a home for $726,525 for No Down Payment. If the Veteran was to buy a home priced above the loan limit then they would need a down payment equal to 25% of the difference between the purchase price and the loan limit. For example, if a Veteran was to purchase a home in Irvine for $826,525 (an even $100,000 above the loan limit) then the down payment required would be $25,000 and the resulting VA loan would be $801,525. Now, in 2020, the Veteran can buy that same home with $0 down. The VA loan will be $826,525. This change will open up the options for Veterans to buy a higher-priced home in areas like Newport Beach, where the VA program has not been widely used. The elimination of VA Loan limits will also help Veterans looking to buy VA approved condos.

What about the Inland Empire?

va mortgage questionsRiverside County and San Bernardino County, or the Inland Empire, will benefit big time from this change. The Inland Empire’s loan limit was set at the basic $484,350 in 2019. That has made it difficult for Veterans looking to buy their first home in the Inland Empire only to find that homes in many areas were priced above $500,000. Now, the barrier to entry will be much easier to break through.

How Does This Affect VA Refinancing?

This will also help those Veterans who already own a home and are looking to refinance to pull cash out above the current VA loan limits. In 2019 VA did tighten the cashout refinance guidelines, making it difficult to pull cash out above 90% a properties value. And it is the “total VA loan amount” including the VA Funding Fee that has to be used in the 90% calculation. But 90% loan to value for a cashout refinance is still better than any other type of Conventional or Government loan program for 1st mortgages.

Eliminating the loan limits means a Veteran who is looking to pull cash out on a property valued at $1,500,000 could get a new VA loan of $1,350,000. At least theoretically. It is important to mention that VA issues the underwriting guidelines but does not actually fund VA loans. Bank fund VA loans. As of this writing, we are still waiting to see how aggressive the banks will get with cashout refinancing are Super Jumbo loan programs.

2020 will be a big year for the VA loan program. Veterans who typically didn’t take a serious look at the VA loan should now learn more about and compare it to other financing programs. VA tends to have lower 30 year fixed rates than other programs, especially in the lower FICO score ranges. Also, the debt to income ratios are not limited to 43% like most Conventional Jumbo loan programs. And only a 2 year wait period is required after a bankruptcy or foreclosure, compared to 4 to 7 years for other types of loan programs. And best of all, even though no down payment is required, there is no monthly mortgage insurance like there is on Conventional loan programs when the loan to value is above 80%.

If you are a Veteran considering a home purchase or refinance, make sure you talk to a Loan Officer who is knowledgable with the VA loan program.

Authored by Tim Storm, an Orange County, CA Loan Officer specializing in VA Loans. MLO 223456. – Please contact my office at Fairway Independent Mortgage Corporation. My direct line is 714-478-3049. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short-term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process