VA Loan Zoning Requirements

13 Replies

I just signed a contract for a foreclosed duplex at Norfolk, VA using my VA Loan. It's going to be my very first investment and it'll allow me to have the other side pay for my mortgage while me and my wife live in it for free. Everything's going great, the seller agreed to pay about about 95% of closing and all major repairs and it appraised $3000 under market value. Until my loan officer told me yesterday that because the appraisal found that it's "Legal, non-conforming to zoning (Grandfathered)" it may affect the property's eligibility with VA due to zoning issues because if it burns down it could only be rebuilt to a SFH. I'm about to find out today what VA will say about it. I'm thinking that's bogus, I'm sure there's more to zoning than what I know but how would VA consider that non-eligible when it's a residential property in a residential area, the only thing is it's a duplex. Even then, if they usually give mixed use properties a pass anyway why would this one be any problem? Does anybody have any experience with this? The atmosphere's really tense right now. I read the handbook for VA Loan guidelines but I can't understand how this could affect the property's eligibility. The only difference is it's going to be rebuilt as a SFH if it burns down, it's still going to be residential no matter what. As far as I know I'm capable of paying the mortgage myself with or without the tenant.

What bank are you using? I just closed on a duplex using my VA loan through USAA.... the loan officers don't always know which way is up...

That being said, I cant see why it would, you are properly zoned, grandfathered in everything is on the up and up. It may have to go to manual underwriting but shouldnt be a problem.

If the rent on the other side is allowing you to get qualified for that duplex then I can see his point.

BTW I tried using USAA to finance a home in 2001 and I literally had to explain 15 times (I counted) about my Reserves related income. I explained one time to a local bank and got the loan. Sounds like they are about as clueless now as they were then. I've had good luck with Pentagon Federal.

Sorry I meant to add that even though I see his point I don't think it will matter keep trying different mortgage companies.


I'm using Suntrust right now. I'm hoping my loan officer is just over thinking it.

Yeah knowing now what I do I dont think I'd go back through them. I have a stack of paperwork on my work desk about 4in high of all the crap I had to sign and send them... then after it was finally sent to the underwriter my signatures were out of date... so print them off sign and scan them back... for 60 days.... was a headache. But they have some great insurance so there is that...

From what I read in @Account Closed post he can afford it without the other side, but the person at the bank is worried about the grandfathered zoning. Is that corred Edsiaren?

THey have some great insurance until as in my case they dropped me for no reason. When that happened I had been with them for over 10 years with no claims and no late payments.

My neighbor had USAA and was finally able to get them to pay for a new roof three years after hail damage and two years after all of the surrounding houses had their roofs replaced. I had longed switched to State Farm by then.

I apologize @Account Closed for helping to hijack your thread.

That's right Andy, he's worried that VA might not guarantee the loan for that specific property because it's non conforming to zoning regulations in that area. I'm worried because my loan officer's worried and that makes the property look bad but I don't see why VA would not consider it eligible, from what I've heard they seem to guarantee loans for mixed use properties in a residential area all the time as long as its in a reasonable stand point so I don't see what the problem would be on something this simple.

That's alright Cal, it's still good information to know.

Its all good information to have, be sure to come back and let us know what they say! Keep us updated!

Will do. I'll let you all know what VA says.

I think the point is being missed. The zoning issue is if it is not zoned for duplex, but is grandfathered- lots of loan companies will not go through because of lack of security (ie-value not protected). Some things you could do-

Norfolk has a guy at planning that has been there since the 70s. Meet w/ him, they may be able to do a letter to the effect of what could be done in an instance of total damage, not cause by you.

-Work w/ the underwritters now to see if it is an issue, compare the cost of SFH t duplex there to see if it even creates a difference in value.

Bottom line- a good agent would have looked at this and made you aware in advance and you can view it yourself as Norfolk has one of the best sites for RE, which includes an entire zoning map. These situations might require a non conforming loan, cash purchase, or walk away as worst case scenario. @Edsiaren Ignacio

@Pete T. @Andy Robison

Thanks Pete, you're right. Do you remember the name of the person from planning? I believe my loan officer had already talked to the underwriter and a VA Rep about whether VA will cover this property but as far as official documentation saying they won't, I haven't seen any in fine print. I told my loan officer I wanted to get a direct reference from the VA Lender's guideline to where it talks about the issue we're dealing with but I have yet to get that reference.

My loan officer won't be able to talk to planning until Tuesday because of memorial day.

@Andy Robison

Unfortunately, we couldn't get it. It's not eligible for VA so nobody wanted to touch it. And without VA to guarantee it, lenders wouldn't give us the money for it. Basically, we had two choices left, go conventional or portfolio but we didn't have the money for the down for either (which was $17,000 @10% for portfolio and $34,000 for conventional). It was just too risky for the lenders. That property was such a loss. We could have lived in it for free. Well, it was a good lesson to learn. The only thing I saw wrong in that was, it was residential, just about the same size of every house, and VA won't touch it because it's a duplex in a SFH only zone. It's not a house in an industrial zone. Just the wrong type of residential property in a residential area. It's complicated but it shouldn't be.

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