FHA Condo Approval Specialist: The VA is Definitely Tougher on Condo Leasing Restrictions

The VA is Definitely Tougher on Condo Leasing Restrictions

The VA is Definitely Tougher on Condo Leasing Restrictions

va condo approvalIn the past month, three of our condominium submissions have been approved by FHA and rejected by the VA - all for leasing restriction language.  Through at least the end of the year, when hired for FHA Condominium Project Approval, we are submitting for VA project approval if requested at no additional charge.  The VA submission package is similar to the FHA submission so we offer to do both.

[For those who don’t know, the VA requires condominium project approval prior to allowing VA financing to encumber any of the units in the project.]

The VA is tougher on leasing restrictions than is FHA, if you can believe that.  The rationale behind it makes sense though: the VA doesn’t want leasing restrictions to impede a Veteran’s** ability to lease his/her unit in the case of deployment.  Therefore, maximum leasing restrictions are reviewed more closely.

Maximum number of leases cannot be established because once this number or percentage is met, no other units may be leased.  It’s not difficult to see that this could impede a Veteran from leasing his/her unit.

Must use a Board-approved lease form or the Board must approve the form on which the lease is written.  This is not allowed because the Board could require a form that is not in compliance with other VA requirements or the Board could reject the form the Veteran has used.

Third-party approval of tenants is also not allowed by FHA.  If the association/Board has the authority to approve or reject potential tenants, most of the time the condominium is not approvable by either the VA or FHA.

Third-party approval of modifications to leases poses a potential restriction for the Veteran.  What if the Veteran wishes to extend or shorten the lease according to changes in his/her deployment period and the Board doesn’t allow it?

Maximum lease period can be an issue for a Veteran if the deployment extends beyond the maximum established lease period.  Fortunately, though, we don’t see this very often.

Often, developers and Boards place the above provisions in place in an attempt to protect the community.  However, in doing so, Veterans are prevented from using their VA benefits to purchase units in the community.

One way to potentially circumvent the above and still obtain a project approval is to include an exception for units that are encumbered with VA financing.  From what we have been told by the VA, this should be allowable in most cases.


**NOTE: the term “Veteran” is being used to conserve space and is meant to represent Veterans, active service members and anyone who qualifies for VA home loan financing.

The Condominium Project Approval Team at ReadySetLoan is dedicated to helping condominium projects across the nation to obtain their approvals with FHA and the VA or become recertified with FHA.  We have assisted nearly 200 condominiums and we can help your association.


ReadySetLoan is an active member of the Connecticut and New England chapters of the Community Associations Institute (CAI) and is a frequent contributor to Common Interest Magazine as an expert in FHA/VA condominium project approvals.


Please contact us with any questions regarding FHA or VA condominium project approvals.  You can email me at askeric@readysetloan.com or call me at 404-433-4565. I will be happy to answer any of your questions.


FHA/VA Condo Approval Specialist

404-433-4565 Cell Phone

860-644-3772 Fax Phone

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 Check out our article in Common Interest magazine on page 19!

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Comment balloon 10 commentsReadySetLoan Condo Approval Team • August 11 2015 11:49AM


Hi Eric -- another well-written and very informative post.  I had no idea about the restrictions VA placed on the "leasing" language that can be found in many condo complexes.  

Posted by Michael Jacobs, Los Angeles Pasadena 818.516.4393 over 5 years ago

Eric it's good to have an update on what's going on with condos as related to VA and FHA loans.  Thank you!  It does make sense to not impede a veteran to leasing should he/she be deployed.  Although - many of the VA loans are for inactive vets, correct? Do they make exceptions for these loans?

Posted by Anna Banana Kruchten CRS CRB, Phoenix Broker, 602-380-4886 (HomeSmart Real Estate BR030809000) over 5 years ago

Eric, thank you the info.  I was not aware of the lease restriction being an issue with VA.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 5 years ago

Like everything else with the government the rulles seem to change daily. Have run across rental restrictions before with VA.

Posted by Bill Reddington, Destin Florida Real Estate (Re/max By The Sea) over 5 years ago

This is a most informative post.  I have not had any VA buyers for condos.... however, now I will be more aware if I have a VA buyer who wants to purchase a condominium.

Posted by Joan Whitebook, Consumer Focused Real Estate Services (BHG The Masiello Group) over 5 years ago

Thank you for sharing this information. I learned something new from this post.

Posted by Gita Bantwal, REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel (RE/MAX Centre Realtors) over 5 years ago

VA appraisers are picky here in our area.  I've had to work through having the front of a driveway replaced from cracking and splashblocks...every single time!

Posted by Bob Haywood, BobHaywood.com (McGraw Realtors) over 5 years ago

Thank you Michael Jacobs - if you have worked with a Veteran to purchase a condo unit, the project would have already been approved so you wouldn't have run into it!

Hi Anna Banana Kruchten - I can't address the question related to inactive Veterans; VA benefits are available to active service members who meet the criteria and I know that they are commonly used to finance units/homes that are near military bases stateside.  But, no, the VA does not allow exceptions for these leasing restrictions.  The condominium would have to create a provision to allow exceptions for VA financed units.

Hi George Souto - like with Michael above, you probably wouldn't have run into it in the past.  They don't check it on the loan-level side to my knowledge

Thank you for your comment Bill

Joan Whitebook - this would really only apply for new project approvals.  If your buyers stick with condominiums that are already approved with the VA, you won't have to worry about it.

Posted by ReadySetLoan Condo Approval Team, The FHA/VA Condo Project Approval Specialists (ReadySetLoan Condo Team LLC) over 5 years ago

That makes me happy Gita!

Yikes Bob!  That is a pain.

Posted by ReadySetLoan Condo Approval Team, The FHA/VA Condo Project Approval Specialists (ReadySetLoan Condo Team LLC) over 5 years ago

Hi Eric - I've actually only had one VA transaction to date and the complex was approved.  There were other issues with the transaction but this restriction wasn't one of them.   It's all about having the right lender(and we didn't in that particular situation).   

Posted by Michael Jacobs, Los Angeles Pasadena 818.516.4393 over 5 years ago