A housing co-operative or co-op refers to a multi-unit building or community owned by a corporation. Instead of buying the property itself, members purchase shares in the corporation and acquire the right to occupy a specific unit. As mortgage experts, we often get asked if VA loans can be used to purchase cooperative housing units. In this article, we will provide a detailed overview of some key considerations regarding co-ops when buying a home with a VA loan.
How Do Housing Co-Ops Work?
A housing co-op is a unique kind of home you can buy. Instead of buying a whole house or apartment directly, you buy a share of a building. Buying a share makes you a part owner with all the other people that live there. Since you partially own the building, you get the right to live in one of the units.
If you’re a veteran or active member of the U.S. military, living in a co-op can be appealing for many reasons. All the people own the property together, so you have a voice in decisions about how to take care of the building. You also get to know your neighbors well since you share responsibility. Usually, you pay a monthly fee to cover repairs, property taxes, and maintenance – that means fewer surprises when it comes to big repair bills. And since all owners want to keep the property in good condition and enjoy it, co-ops often have appealing amenities like gyms, community rooms, and entertainment areas.
The main drawback is that co-ops can be difficult to purchase with a VA loan.
Buying a Co-Op Home with a VA Loan: Is It Possible?
Unfortunately, when it comes to buying a co-op home using your VA benefits, things can get complicated. As of right now, many co-ops are not eligible for VA loans. So, before you get your heart set on one, double-check that it meets the VA’s criteria.
Things may change in the future. In 2020, a bill was introduced titled H.R. 8668 (IH) – Fair Access to Co-ops for Veterans Act that aims to extend the VA loan guarantee to cooperative housing units. The last action taken on this bill was in August 2022. Only time will tell if co-ops will once again become eligible for VA loans in the future.
As your lender, we’d be happy to guide you through the process and help you determine if you can purchase a certain property using your military benefits.
Get Expert Advice
If you have questions about buying a home with a VA loan, please do not hesitate to reach out to us. We will be more than happy to assist you.