On a VA home purchase and VA cash out loans, an appraisal is always required. The appraisal is ordered by your Lender directly through the VA where they appoint a licensed, approved appraiser in your area. The appraisal process through the VA is not the same as other types of financing because it can take a bit longer to complete, and generally they can’t be asked to rush. However, don’t let this deter you from choosing a VA loan. Find out more details from your lender before making a decision. You can still close a loan in the same time frame with VA as you can with other types of financing.
On VA streamline refinances, the VA does not require an appraisal, however some lenders do as an overlay. See How is the VA involved with loans. As the housing market crashed near 2008, lending guidelines began to tighten up. Lenders began requiring appraisals for certain VA streamline loans. This has continued through today’s times, howevr has been loosening up recently.
A lender’s determination whether an appraisal is required can be based on several factors, such as who your current lender is, where your property is located or if the home is your primary investment property. A lender may tell you if an appraisal is required or not.
Appraisals can range from a full report, a drive-by or an online automated value. A full report is where the appraiser comes into the home, while a drive-by is where they drive past it to ensure the home is there with no major issues seen from outside. An online, automated value is commonly used to determine the value. This option usually is at no cost to the borrower but may not provide the desired results in value. Generally, when an appraisal is used, the new loan amount cannot exceed the value of the appraisal. So, if the value comes in low, you may not be able to obtain a VA streamline loan with that lender. When online automated values are used, many lenders have a cap such as 95% of that value that cannot be exceeded. Some lenders, which is less common, can go up to 125% of the value when using the online automated value.
For any VA loan, you must be either employed or receive a qualified source of income to be eligible. Retirement, Social Security and Disability can all be qualified income. For streamline loans, the VA does not require you to be employed or have a qualified income since they have already approved your loan.