VA Handbook Chapter 16: Condos and Planned Unit Developments, Explained in Plain English

Last reviewed: October 6, 2026
Primary source: VA Pamphlet 26-7 (VA Lenders Handbook), Chapter 16: Common Interest Communities, Condominiums and Planned Unit Developments. The chapter overview pages carry Change 3, July 14, 2003; Section A pages carry January 1, 2001 (Change 1) and February 5, 2001; the Section B attorney-opinion pages carry January 1, 2001. No newer Change date appears anywhere in the chapter. Because the newest VA Circulars that touch this topic (the Michigan site-condo waiver and the current condo lookup tools) postdate the chapter, I have notated every place where current guidance differs. Read the amber “Updated since the handbook” boxes along with the quotes.

How this post works: We go through Chapter 16 in the VA’s own order: the overview, all of Section A (3 topics), and all of Section B (the attorney-opinion topics plus Exhibits A and B). For each section: what the handbook says (with direct quotes in the blue boxes), what that means in plain English, and where lenders commonly add their own requirements on top. The story boxes are illustrations based on situations I see in my pipeline. Names and identifying details are changed, and no story describes any one borrower’s file.

Read this first (the three sentences that matter most)

If you are buying a condo with a VA loan, the project must be VA-approved before your unit can be guaranteed, and the lender is the one who submits the project for approval, not you and not the seller. If you are buying a townhouse or detached home in a planned unit development (PUD) with an HOA, there is no VA project approval to wait on, but the HOA’s assessment lien must still sit behind your VA mortgage. Check the project’s status on VA’s Condo Report before you write an offer, because the single most common condo delay I see is discovering the approval question after the contract is signed.

Topic 1: Chapter Overview, what a common interest community is

What this section says

The chapter opens with a definition. A common interest community is a subdivision containing common land, often including recreational amenities. That common property is typically owned by an association of the homeowners (HOA), to which they all must belong and pay lien-supported assessments for a proportionate share of the expenses of the HOA. Condominiums and planned unit developments (PUDs) are common interest communities. VA states its goal plainly:

The overview then draws the line that organizes the whole chapter: there are VA requirements applicable to all properties located in either a PUD or condominium, and separately, condominiums (but not PUDs) must be approved by VA before any lots or units in the project are eligible for VA loan guaranty. It also points readers to a nationwide list of VA-approved condominiums, reachable through what was then called The Appraisal System (TAS).

What that means

Think of this chapter as VA’s consumer-protection layer for shared-ownership housing. When you buy into a condo or an HOA community, you are not just buying a home, you are buying into a corporation with rules, dues, insurance, and a board. VA wants to verify that the corporation and its governing documents are sound before it guarantees a loan inside it. Condos get the full review (project approval). PUDs get a lighter touch (no project approval, but the title and lien rules still apply).

Where lenders add overlays

Most lenders I work with treat the VA Condo Report as the starting point, not the finish line. Even for an approved project, the lender’s underwriter will re-verify the project’s current status and pull a condo questionnaire from the HOA or management company to check insurance, litigation, reserves, and owner-occupancy numbers before closing. None of that is a VA overlay, exactly; it is the lender protecting itself on the same risks VA’s project approval covers. The practical advice is simple: when your agent sends you a condo listing, send your lender the project name and ask them to check the VA Condo Report that day, not the week before closing.

Topic 2: 16-A.01 Rules that apply to every property in a common interest community

What this section says

This topic applies to every VA loan secured by property in a condo or PUD, approved project or not. It starts with a rule and a reassurance: only condominiums must be approved by VA, but lots or units in condos and other planned unit developments must still meet VA’s title and lien requirements, and the lender is responsible for making sure they are met on each loan. The handbook notes there is no specific VA requirement that lenders keep evidence in the file, though it suggests they be guided by their legal counsel on that point.

The section then walks through three pillars:

Acceptable title. The title rules come from VA regulation 38 CFR 36.4350: the estate must not be less than fee simple (with stated exceptions), the title must not be subject to unreasonable restrictions on use and occupancy (with stated exceptions), and certain minor title limitations will not be considered as materially affecting value.

Superior VA lien. Every VA loan must be secured by a first lien on the property. The handbook’s sentence on this is worth quoting exactly, because it is the rule that kills more condo and PUD closings than any other:

Appraisal and Notice of Value. Fee appraisers use the Uniform Residential Appraisal Report (Freddie Mac Form 70 / Fannie Mae Form 1004) for PUD properties and the Individual Condominium Unit Appraisal Report (Fannie Mae Form 1073) for condos. The Notice of Value for every property in a PUD or condo carries a condition that the property is in a development with mandatory HOA membership, making the lender responsible for confirming the title meets VA requirements and that HOA assessments are subordinate to the VA mortgage. For a condo that VA has not approved (or where approval requirements are still outstanding), the NOV adds:

The topic also flags other condo-specific regulatory requirements by reference: the presale requirement in 38 CFR 36.4360a(c), the unit and common-element warranty requirements in 38 CFR 36.4360a(d), and a note that a wood-destroying insect inspection is required in low-rise and high-rise units only when the fee appraiser observes a potential problem.

What that means

In plain English: your loan must be in first position, and the HOA’s right to collect dues cannot leapfrog your mortgage. In most states the declaration itself subordinates the HOA lien to first mortgages, so this is automatic, but where it is not, the deal has a problem that only the HOA’s documents can fix. The appraisal form split (1004 for PUD, 1073 for condo) also tells you something useful: if your appraiser ordered a 1073, VA sees the property as a condo and the project-approval question applies.

Where lenders add overlays

This topic is where I see lenders do their own quiet screening of PUDs. VA does not require project approval for a PUD, but many lenders still run a condo-style questionnaire on the HOA when dues are high, litigation is disclosed, or the community has unusual amenities, because a broken HOA is a collateral risk whether or not VA calls the project a condo. I also see lenders flag any declaration language that gives the HOA a super-priority lien for assessments; how that priority interacts with the VA-guaranteed loan’s required lien position is something the lender and title reviewer have to confirm against applicable VA and title guidance before signing off, because super-priority lien treatment varies by state and lien structure.

Illustration based on situations I see in my pipeline.

Topic 3: 16-A.02 How a condominium project gets VA approval

What this section says

This is the procedural heart of the chapter. To get a condo project approved, the lender or sponsor sends the VA office of jurisdiction two things: a written request for VA approval and a copy of the condo’s organizational documents. VA reviews the documents for compliance with VA regulations and notifies the lender or sponsor of its decision. The handbook states the gate rule twice, and it is worth reading once in full:

Ways to expedite. The chapter lists four shortcuts:

• HUD or USDA approval. “Generally, projects already approved by the Department of Housing and Urban Development (HUD) or the United States Department of Agriculture (USDA) do not need further VA review. Upon receipt of evidence of HUD/USDA approval, such as a copy of the HUD/USDA approved project list or the project approval letter, the VA office of jurisdiction adds the project to the nationwide VA list without issuing a formal VA approval letter.” The handbook adds that in rare cases where HUD or USDA approved a project that VA finds noncompliant with VA regulations, VA notifies the lender as soon as practicable that it will not guarantee loans in the project.
• Attorney’s opinion. Described as “a highly recommended option” for condos not approved by HUD or USDA. This is all of Section B, covered in Topics 5 through 10 below.
• Previously approved documents. When the submitted documents are essentially the same as a set VA already approved, the lender includes a certification from the declarant or the declarant’s attorney stating that fact, identifying the previous set, and describing any variation.
• State agency certification. If a state agency certifies the condo was created in compliance with that state’s laws, include the certification.

VA’s decision. After review, the VA office of jurisdiction sends written notice. If approved, the notice states any special conditions that must be met before guaranty of an individual loan, such as recording of documents, the presale requirement, or completion of common areas. (Note: there is no formal VA approval letter for projects accepted on the basis of HUD or USDA approval.) If documents are missing, incomplete, or inconsistent, or there are correctable deviations from VA requirements, VA explains what else is needed and suspends processing until it arrives. If the project is unacceptable, the notice states the reason. And there is a practical fix for one common rejection: when the documents contain objectionable provisions tied to unreasonably retained declarant or developer controls and amending them is difficult, VA may consider a separate recorded agreement from the declarant relinquishing the objectionable provisions.

Amendments after approval. VA recommends that the declaration be amendable by an instrument approved by not less than 67 percent of unit owners. Once a project is approved, the association must request VA approval of proposed amendments before recordation, and:

One exception: VA approval is not required for amendments that annex additional phases to the condo in accordance with a development plan VA previously accepted.

Mortgagee rights. The topic closes with a list of rights the condo documents may give to first-mortgage holders, if the lender makes a written request to the association: prior approval by first lienholders before the association can abandon condo status, partition or subdivide a unit or the common elements, change the percentage interest of unit owners, or materially amend the legal documents; timely written notice of any condemnation or eminent domain proceeding and of substantial damage or destruction to the common elements; the right to examine the association books, receive annual audited financial statements, and be given notice of association meetings with the right to send a representative.

What that means

For you as the buyer, this topic means three practical things. First, you cannot start this process yourself; your lender submits it, and the HOA or management company supplies the documents. Second, the review can take weeks and depends entirely on how fast the HOA produces paperwork, which is why condo deals live or die on HOA cooperation. Third, if the developer is still in control of the HOA, changes to the governing documents need VA’s sign-off, which is one more reason new projects move slower.

Where lenders add overlays

This is the topic where lender overlays are heaviest, and most of them are about time, not rules. Many lenders will not order the appraisal until the project shows as accepted on the VA Condo Report, because if the project is ultimately rejected, the appraisal fee is gone. Some lenders maintain their own project blacklists based on prior bad files: litigation over construction defects, insolvent HOAs, or buildings with uninsurable features. Those are not VA rules, they are the lender deciding it does not want the collateral risk. If your lender says “we don’t do condos in that building,” that is usually an overlay, and another VA lender may feel differently. A condo questionnaire from the HOA is also effectively universal now, even though the chapter does not name one; expect 2 to 4 weeks just to get it back from the management company, and HOA rush fees are commonly passed to you at closing.

Illustration based on situations I see in my pipeline.

Topic 4: 16-A.03 The table of required documents

What this section says

This topic is a 27-item table identifying every document the VA office of jurisdiction may need to review to approve a condo project. Some documents are required only if applicable, only when the declarant controls the project, or only for conversion projects. The last column says whether a draft is acceptable; for anything where loans have already closed in the project, recorded or final documents must be provided. A final group of documents (items 21 through 27) may not be available with the initial package, but must be submitted as soon as available and before any unit in the project can be considered eligible for VA guaranty.

The full table, condensed:

What that means

Read the table as a map of what VA is actually checking: the legal documents that create the community (declaration, bylaws, plats), the money (budget, financials, assessments, litigation), the governance (meeting minutes, management agreements), and the physical project (development plan, completion evidence, utility adequacy). Items 16 through 19 are the ones that most often slow a file down in my experience: the budget, the financials, the litigation statement, and the meeting minutes all come from the HOA or its management company, and they are where skeletons live. Item 27 is the presale certification, which matters for new projects: under 38 CFR 36.4360a(c), bona fide agreements of sale must have been executed by purchasers other than the declarant for 70 percent of the total units in the project before VA will guarantee the first unit loan (VA can approve a lower percentage case by case).

Where lenders add overlays

The chapter’s table is the VA floor; the lender’s condo questionnaire is the ceiling. Nearly every lender today requires a completed condo questionnaire from the HOA covering owner-occupancy ratios, delinquency rates, pending litigation, insurance, and reserves, and many lenders have hard cutoffs (for example, on the share of units delinquent on dues or the share owned by investors) that do not appear anywhere in Chapter 16. Those cutoffs come from the lender’s investors, not from VA. When a condo is rejected for “project standards,” ask your loan officer whether it was a VA rule or an investor overlay; the answer determines whether another lender can say yes.

Topic 5: Section B overview and 16-B.01, the attorney’s opinion

What this section says

Section B is VA’s express lane. Lenders and sponsors seeking VA approval of a condo are encouraged to include an attorney’s opinion that the project meets VA requirements, along with the organizational documents:

Topic 16-B.01 sets the general requirements: the opinion must be prepared in letter form on the attorney’s firm letterhead, signed and dated, showing the attorney’s name and title, and it must address four areas:

• Project identification: the legal and marketing names of the project, its location, whether the lots are created and subjected to the declaration in phases (with the approximate number of phases and the identity of the phases), the specific units and common areas subjected in the first phase being submitted, and the status of any master or umbrella association (whether documents are recorded, a general description of the overall project, and the number of sub-associations planned).
• Documents reviewed: at a minimum, the declaration with all exhibits, the association bylaws, the articles of incorporation, the public offering statement or information brochure, and the same documents for any umbrella or master association.
• Attorney’s qualifications: a statement, in substantially the handbook’s form, that the attorney is experienced in real estate law in the jurisdiction where the project sits and is familiar with the laws governing property owners associations there, and is consequently qualified to issue the opinion.
• The actual opinion: covered in Topic 6 (16-B.02).

What that means

Instead of VA staff reading every page of the declaration, bylaws, and plats themselves, a qualified local real estate attorney reads them and certifies they comply. For the lender, paying for that opinion is usually the cheapest way to shorten the review. For you as the buyer, you will rarely see this letter; it travels between the lender’s attorney and the VA office of jurisdiction. But its fingerprints are on your timeline: a complete opinion package gets an answer faster than a raw document dump.

Where lenders add overlays

In practice, most lenders do not hire the opinion attorney themselves; the developer’s or sponsor’s attorney typically prepares it, and the lender submits it. I tell buyers this because it explains a common delay: if the developer’s attorney is slow producing the letter, or the letter comes back conditional (based on unrecorded documents), the file stalls. A conditional opinion is not the end of the world; the chapter allows it, but the recorded documents must be submitted to VA before the first VA loan is guaranteed, along with a certification from the attorney that the recorded documents match the ones the opinion was based on (or an explanation of what changed and how it affects the opinion).

Topic 6: 16-B.02 What the attorney’s opinion must address

What this section says

This topic lists everything the actual opinion must cover:

• Compliance with VA regulations: the opinion must address compliance of the organizational documents with 38 CFR 36.4356 through 36.4360a(g) for condominiums.
• Compliance with other VA requirements: the technical areas in Exhibit A (Topic 9 below).
• Compliance with local and state requirements: the opinion must address compliance with the material requirements of applicable state and local laws governing the creation of property owners associations as of the date of the opinion, and identify those laws by name and citation.
• Variations: the opinion must identify any variation from any requirement, including any failure to comply with a specific requirement. And there is no wiggle room at the VA office level:

• Master or umbrella association: if one exists, the attorney may provide a separate opinion addressing the requirements for that form of association.
• Special conditions: the opinion must state whether any of the following are present and explain each one to show VA compliance: a conversion of a building from a former use (such as former rental housing); HOA ownership of a community water or sewage disposal facility; alienation restrictions tied to a state or local program for low or moderate income purchasers; or restrictions associated with housing designed for older persons.
• Mixed-use development: if the project includes multifamily, commercial, or other nonresidential use, the opinion must detail the arrangements, the percentage of nonresidential units or uses, and the voting rights of those units.
• Conditional opinions: when the opinion is based on unrecorded documents (including plats), the recorded documents must be submitted to VA before the first VA loan is guaranteed, with an attorney certification that they match the original opinion or explaining the changes and their effect.

What that means

The opinion is a compliance map, not a rubber stamp. The attorney has to walk the documents against three bodies of law (VA regulations, the chapter’s Exhibit A technical requirements, and state and local law), flag anything that deviates, and understand that deviations usually require a recorded fix, because the local VA office cannot waive a regulatory defect. The special-conditions list is worth noticing: conversions, HOA-owned water or sewer systems, income-restricted programs, and age-restricted housing all get extra scrutiny because each one can change who controls the project or who can buy in it.

Where lenders add overlays

The mixed-use and commercial-component items are where I see lender overlays bite hardest. VA’s chapter wants the arrangements explained; many lenders and their investors go further and cap the percentage of commercial space in the project, or decline projects where one entity controls too many units. Neither cap is in Chapter 16. They come from the secondary market. If your condo sits above a row of shops, ask your lender about their commercial-space policy early; it is one of the most common non-VA reasons a condo file dies.

Topic 7: 16-B.03 Assumptions the opinion may include

What this section says

The attorney is allowed to assume a list of foundational facts rather than independently verifying each one. The permitted assumptions are:

• Documents are complete and accurate: all blanks were properly completed, all signatures and seals duly made and affixed, all exhibits completed and attached, and the legal descriptions accurately and completely describe the property subjected to the declaration.
• Documents are authorized: every party had full power, authority, capacity, and legal right to execute the documents, and the individuals who signed on behalf of entities were duly authorized and legally competent.
• No violations: no provision of any document violates any contract, charter, bylaw, resolution, agreement, or binding judicial or administrative order.
• Qualified parties: each entity involved (including the declarant) was duly organized, validly existing, in good standing in its formation jurisdiction, and qualified to do business where the project is located.
• No waivers or limitations: no oral or written modification of the documents, no waiver of any provision by conduct, and no side agreements inconsistent with the documents.
• Not subject to rescission or reformation: none of the documents are vulnerable to rescission for fraud, duress, lack of consideration, mistake, or other factors affecting execution.
• Recording of documents: the declaration was duly filed, indexed, and recorded in the local land records; the articles of incorporation were filed with the applicable agencies; and all recording fees, charges, and taxes were paid.
• Authenticity: originals are authentic, copies conform to originals, signatures are genuine, and public records reviewed are accurate and complete.
• Accuracy: every statement in the documents is accurate and contains all material facts needed to keep the documents from being misleading.
• Correct and complete copies: the articles, declaration, and bylaws submitted are true, correct, and complete, unamended, and in full force and effect, and no other agreements govern the association’s organization or operation.

The attorney must identify any other assumptions included in the opinion; VA reviews those case by case.

What that means

This is the chapter being realistic about what a legal opinion can and cannot do. The attorney is certifying what the documents say and that they comply with the law, not running a private investigation into whether every signature was real or every corporate filing is current. If you ever wondered why the opinion letter reads like it trusts the paperwork, this topic is why: VA explicitly permits that trust, and only asks that any extra assumptions be disclosed for case-by-case review.

Where lenders add overlays

Lenders rarely argue with these assumptions, but title insurance does the job the assumptions leave open. Your title commitment and title policy are what actually protect you against recording defects, undisclosed liens, and ownership disputes. The attorney’s opinion protects VA’s decision to approve the project; the title policy protects your ownership. Make sure both exist in your file. I have seen buyers try to save money by questioning the title policy on a condo purchase; on a condo, where the common-element ownership structure is the whole ballgame, that is the wrong place to economize.

Topic 8: 16-B.04 Qualifications and limitations the opinion may include

What this section says

Just as important as what the opinion covers is what it is allowed to disclaim. The permitted qualifications and limitations are:

• Subjective factual standards: no opinion on whether document provisions are “reasonable” or “equitable.”
• Zoning: no opinion on compliance with zoning laws, height restrictions, setbacks, or environmental requirements, or their effect on the project.
• Subdivision requirements: no opinion on compliance with subdivision laws.
• Building requirements: no opinion on compliance with building codes, health or safety laws, or whether the declarant obtained building permits, approvals, occupancy certificates, or licenses.
• Operation: no opinion on whether the project is being operated or administered in accordance with the governing documents or the law.
• Applicability of laws: no opinion on the laws of any jurisdiction other than where the project is located, and no opinion on tax or securities laws.
• Title: no opinion on title to the lots, common areas, or other property: not ownership, not lien priority, not encumbrances or restrictions affecting the property. The attorney may assume the declarant holds the requisite title.
• Inference: no inference is to be drawn beyond the strict scope of the opinion as expressed.
• Dated opinion:

What that means

The opinion is a snapshot of the documents against the law on the day it was written. It does not promise the building meets code, the HOA is well run, the title is clean, or the law will not change tomorrow. That is why project approval is only one gate in your purchase: the appraisal checks the property’s condition and value, the title search checks ownership and liens, and the condo questionnaire checks the HOA’s current health. The opinion answers one question, “do these documents comply,” and leaves the rest to the other parts of your file.

Where lenders add overlays

The building-code and operation disclaimers are exactly where lender overlays rush in. The opinion will not tell you the building is up to code, so the lender leans on the appraisal, and for older condo buildings many lenders now require extra documentation on deferred maintenance, special assessments, and insurance adequacy that goes well beyond anything in Chapter 16. If you are buying in an older high-rise or a converted building, expect the lender’s project review to dwell on the physical building far more than this chapter does.

Illustration based on situations I see in my pipeline.

Topic 9: 16-B.05 Exhibit A, the other VA requirements

What this section says

Exhibit A is the technical checklist the attorney’s opinion must address, organized by document. It is the longest part of the chapter, and it reads like VA’s accumulated wisdom about everything that can go wrong in a shared-ownership community. The highlights, grouped:

The declaration (20 requirements). It must contain a legal description of the property subject to it and a description of the common areas submitted with the first phase. Every unit owner must be a member of the association. Voting rights must be fully described, with minority-interest protections where development types differ; the declarant’s votes may not be weighted beyond 3 to 1 in the declarant’s favor, and declarant control ends no later than 120 days after 75 percent of the planned units are conveyed to non-declarant owners, with an outside limit of 7 years from recordation of the declaration (or 5 years after the most recent annexation in a phased project). Amendment rules require at least 67 percent member approval for material amendments and extraordinary actions, with detailed meeting, notice (at least 25 days), quorum (20 percent for 250 or fewer members, 10 percent up to 1,000, 5 percent above 1,000), and class-vote provisions; termination of the declaration, dissolution of the association, and conveyance of all common areas need 67 percent of all authorized votes including a majority of non-declarant votes. Owners get a nonexclusive easement of use and enjoyment in the common areas that passes with title, plus ingress, egress, and utility easements that the board cannot suspend for covenant violations or unpaid assessments. The declaration must provide for common-area maintenance, an annual operating budget with assessment levy and collection powers, and rules for assessment increases. Two provisions deserve direct quotes because they protect you financially:

And on delinquencies, the chapter adds that units securing VA-guaranteed loans will not be subject to delinquent assessments in excess of 6 months in any case where the association has not brought enforcement action against the current unit owner, and it warns mortgage holders that no VA claim payment will be made for amounts they paid to clear prior HOA assessment liens. Further declaration requirements cover insurance (property damage, liability, and personnel coverages; mortgagee clause with at least 10 days’ notice before lapse or cancellation), reconstruction after casualty or condemnation, parking, mortgagee notice rights (eligible mortgagees get notice of material amendments, extraordinary actions, major property losses, insurance changes, 60-day assessment defaults, and proposed termination, plus the right to demand professional management and an audit), party walls for townhouse communities, expansion and annexation rules for phased developments, and termination provisions.

The bylaws (9 requirements). Board meeting procedures and quorum; member meeting quorum (same 20/10/5 percent tiers); at least annual member meetings once non-declarant members exist, with special meetings on written request of a percentage of non-declarant owners, proxy voting, and mail voting if state law allows; board powers and duties; election, removal, and replacement of directors and officers; member notices (at least 7 days generally, 25 days for material amendments or extraordinary actions); record-keeping and member inspection rights (records kept at least 3 years unless the law requires more); and member amendment procedures.

The articles of incorporation (6 requirements). Statement of purposes; mandatory membership for every unit owner; voting rights; election, removal, and replacement of directors; member amendment procedures; and member dissolution procedures.

The public offering statement or information brochure. It must give buyers, at a minimum, the organizational structure, membership and voting rights including the declarant control period, the development plan with expansion, phasing, merger, and dissolution terms, the initial assessment amount with lien and enforcement terms, a projected budget for at least 1 year at full buildout (a multiyear feasibility budget with reserve tables for phased projects over 200 units or significant common-area improvements), the method of changing assessments, user fees, common-area descriptions, services, maintenance, architectural controls, declarant retained rights, owner and association insurance, parking, owner liability for others’ violations, individual assessment powers, and any affiliation between the managing agent and the declarant.

Reserved rights. The declarant, its affiliates, or the sponsor must not have reserved certain rights unless VA reviewed them and found them reasonable: leasing common areas to or from the association (except development-related offices), taking franchises for cable or antenna services, retaining veto power over association acts beyond protecting development rights, entering management contracts extending past declarant control unless limited to 2 years or terminable by the owner-controlled board, or reserving an unlimited right to amend the covenants or replat lots.

Restrictions on alienation. The following may not be present, under 38 CFR 36.4350: a right of first refusal; a right of prior approval of a purchaser or tenant; leasing restrictions that unreasonably restrict use and occupancy; or any minimum lease term over 1 year.

What that means

Exhibit A is VA’s way of saying: the documents are the community. Voting caps keep the developer from ruling forever. The 67 percent amendment rule keeps a small faction from rewriting the deal. The assessment and insurance rules keep the community solvent. The prohibited list (no right of first refusal, no buyer-approval rights, no harsh lease restrictions) keeps your ownership freely transferable, which is what makes the unit good collateral. When a project gets rejected, it is very often one of these items: a declarant who kept too much control, an amendment procedure that lets too few owners decide, or a document that quietly restricts selling or leasing.

Where lenders add overlays

Two Exhibit A items routinely collide with lender overlays. First, the 6-month delinquent-assessment note: many lenders apply their own delinquency caps (often expressed as a percentage of units more than 60 days behind) that are stricter than anything in this chapter, and a project can pass VA’s document review while failing the lender’s questionnaire. Second, the leasing-restriction rules: VA prohibits only unreasonable restrictions, but plenty of lenders and investors treat any meaningful rental cap as a problem, especially in buildings with high investor concentration. Again, ask whether a “no” came from VA or from the investor behind your loan.

Topic 10: 16-B.06 Exhibit B, the condominium regulations

What this section says

Exhibit B is short: it points the reader to the actual condominium regulations, which at the time lived at an address on VA’s home loan site. The regulations the attorney’s opinion must address are 38 CFR 36.4356 through 36.4360a(g), plus the title and lien regulations referenced throughout the chapter (38 CFR 36.4350 through 36.4352).

What that means

The handbook is the procedure manual; the Code of Federal Regulations is the law underneath it. When the opinion certifies compliance “with VA regulations,” this is the body of law it means. Borrowers never need to read these sections cover to cover, but two are worth knowing by name: 38 CFR 36.4350 (title requirements, including the ban on unreasonable restrictions on use and occupancy) and 38 CFR 36.4360a (condo appraisal requirements, including the 70 percent presale rule for proposed or declarant-controlled projects and the unit and common-element warranty requirements).

Where lenders add overlays

Lenders rarely overlay the regulations themselves; they overlay the evidence. The chapter says the lender must ensure the requirements are met, and modern lenders satisfy themselves with the condo questionnaire, the insurance declarations page, and the title commitment rather than by reading the CFR. The overlay to watch is staleness: a project approved years ago can drift out of compliance (amendments recorded without VA approval, insurance lapsing, litigation filed), and the lender’s pre-closing reverification can surface that drift even though the project is still on the VA list. Approval is not a lifetime pass if the facts changed.

Frequently asked questions

Does every condo project need VA approval before I can buy a unit with a VA loan?

Yes, with one state-specific exception. The chapter’s gate rule is that the condominium must be approved by VA before any unit in the project is eligible for VA loan guaranty. The exception is Michigan site condominiums (detached single-family homes under a condo declaration), which have been processed as single-family detached homes, with no VA project review, since VA Circular 26-18-12 in 2018.

What is the difference between a condo and a PUD for VA purposes?

It is the legal form of ownership, not the building style. In a condominium you own your unit plus an undivided interest in the common elements, and the project must be VA-approved. In a planned unit development you typically own your lot in fee simple with mandatory HOA membership, and no VA project approval is required, though the title and lien rules (including HOA assessment subordination) still apply. A townhouse can be either one; check the declaration, not the photo.

How do I check whether a condo is VA-approved?

Search the VA Condo Report on VA’s LGY Hub at lgy.va.gov/lgyhub/condo-report by state, county, project name, or condo ID. The handbook’s old internet address for the list is dead, so use the LGY Hub link. Have your lender re-verify before the appraisal is ordered.

My condo is not on the VA list. Can I still use a VA loan?

Yes, if the project can be approved. Your lender submits a written request plus the project’s organizational documents to the VA office of jurisdiction for review. How long it takes depends mostly on the HOA: cooperative HOAs with clean documents move in weeks, uncooperative ones can take months, and some HOAs will not produce the documents at all. This is why you check the list before writing the offer.

Is there a single-unit or spot approval option, like FHA has?

The handbook describes only project-level approval, and I could not verify a single-unit approval path in any official VA circular or regulation while researching this article. Some current lender guides describe a single-unit review path introduced around 2019, but without an official VA source I do not present it as a reliable option. Plan on full project approval, and let your lender tell you if they have a narrower path they have actually used.

How long does VA condo approval take?

The chapter sets no timeline, and honestly neither can I: it depends on the VA office of jurisdiction’s backlog and, far more, on how quickly the HOA or management company produces the documents in Topic 4’s table. Including an attorney’s opinion letter is the chapter’s recommended way to speed things up. Build extra weeks into your contract, not extra days.

Do PUDs need VA project approval?

No. The chapter is explicit: condominiums (but not PUDs) must be approved by VA before any lots or units in the project are eligible for VA loan guaranty. But every loan in a PUD must still meet the title and lien requirements, the lender is responsible for confirming that, and your NOV will be conditioned accordingly.

Why does my lender care that the HOA assessment is subordinate to my mortgage?

Because VA requires your loan to be in first-lien position. If the HOA’s assessment lien could leapfrog your mortgage, a dues dispute could threaten the lender’s collateral. The chapter requires the lender to ensure any mandatory HOA assessment is subordinate to the VA-guaranteed mortgage, and the declaration’s subordination language is one of the first things a project review checks.

What is the 70 percent presale rule?

For a proposed, under-construction, or declarant-controlled condo project, bona fide purchase agreements must have been executed by non-declarant buyers for 70 percent of the project’s total units before VA will guarantee the first unit loan (38 CFR 36.4360a(c)). The lender certifies this, and VA can approve a lower percentage case by case. This is why buying into a brand-new building with a VA loan is harder than buying a resale in an established one.

What is the attorney’s opinion letter?

It is a letter from a qualified local real estate attorney, submitted with the project documents, certifying that the project’s organizational documents comply with VA regulations, the chapter’s technical requirements, and applicable state and local law. The chapter “highly recommends” it because it shortens VA’s review. It covers what the documents say, not whether the building is sound or the HOA is well run.

Can the HOA change the governing documents after VA approval?

Material changes need member approval (the chapter recommends at least 67 percent), and while the declarant controls the HOA, VA approval of amendments to the declaration, bylaws, or other enabling documents is required before recordation, evidenced by a board officer’s written statement on VA Form 26-1844. Annexing additional phases under a previously VA-accepted development plan does not need VA approval.

What kills most condo project approvals?

In my experience, the top offenders are uncooperative HOAs that will not produce documents, declarations with prohibited provisions (rights of first refusal, buyer-approval rights, harsh lease restrictions), declarants who retained too much control, and weak HOA finances or undisclosed litigation surfacing in the budget and meeting minutes. The chapter’s document table and Exhibit A exist precisely because each of these has burned a veteran or the government before.

Where do I get help if my condo file is stuck?

Your lender owns the submission, so start there and ask exactly which document the VA office of jurisdiction is waiting on. If you want an independent check on a project’s status, the VA Regional Loan Center line is (877) 827-3702. And if the blocker is the HOA, remember the HOA works for the unit owners: a polite, written request from the seller (an owner) to the management company often moves faster than anything the lender sends.

Related reading

Chapter 16 is the project-approval machinery for shared-ownership housing. These guides cover the rules around it:

• VA Handbook Chapter 12: Minimum Property Requirements, Explained in Plain English: the MPR standard the condo unit itself must still meet. Project approval clears the community; the appraisal still has to clear the unit.
• VA Handbook Chapter 7: Special Underwriting Situations, Explained in Plain English: covers construction and permanent loans and other special loan types, useful if your condo is new construction.
• VA Handbook Chapter 5: Processing VA Loans, Explained in Plain English: how the loan moves through underwriting and closing, including the NOV conditions this chapter adds.
• VA Handbook Chapter 3: The VA Loan and Guaranty, Explained in Plain English: what the guaranty covers and why VA protects its collateral position so carefully in this chapter.
• VA Handbook Chapter 10: Property Eligibility and Appraisal Requests: the appraisal side, including which form the appraiser uses for condos versus PUDs. (Post not yet published at the time of writing.)
• VA Handbook Chapter 11: Appraiser Requirements: what the fee appraiser must do on condo assignments, including conversion-rehabilitation analysis. (Post not yet published at the time of writing.)
• VA Handbook Chapter 13: Notices of Value: the NOV forms and the condo-related conditions this chapter requires on them. (Post not yet published at the time of writing.)

Sources

• VA Pamphlet 26-7 (VA Lenders Handbook), Chapter 16: Common Interest Communities, Condominiums and Planned Unit Developments. Chapter text verified against a complete verbatim copy of the official chapter (overview, all of Section A: 16-A.01 through 16-A.03, and all of Section B: 16-B.01 through 16-B.06 with Exhibits A and B, Change 3 / July 14, 2003 on the overview and document-table pages, January 1, 2001 on the Section A overview and Section B pages, February 5, 2001 on one 16-A.01 page): https://docsatlas.com/.pdf/pdfs/P331057044678817/import_9P8UL3DjqL.pdf. The official chapter title (“Common Interest Communities, Condominiums and Planned Unit Developments”) and all topic names come from the chapter’s own overview tables. The VA Pamphlet 26-7 is a U.S. government publication (public domain).
• Cross-check: a second hosted copy of the chapter’s document table and amendment language was consistent with the full copy (docsatlas.com search-result text for 16-A.02/16-A.03, matching the “January 1, 2001 16-A-8” and Change 3 footers).
• VA Circular 26-18-12, “Changes to Processing Site Condominiums Located in the State of Michigan,” May 24, 2018: https://www.benefits.va.gov/HOMELOANS/documents/circulars/26_18_12.pdf. Effective immediately, Michigan site condominiums are processed as single-family detached residences; VA no longer reviews their legal documents. This supersedes the chapter’s condo-approval requirement for Michigan site condos.
• VA Circular 26-20-36, September 18, 2020: https://Benefits.VA.gov/HOMELOANS/documents/circulars/26_20_36.pdf. Reissues and details the Michigan site-condo variance: fee-simple and first-lien-priority requirements remain, no VA condo ID, property identified as a condominium in WebLGY appraisal request item 3A without a condo ID, NOV item 4 condo condition not required but the case flagged as “Site Condominium” on NOV item 20, and appraisers still use Fannie Mae Form 1073 with the project information section completed.
• 38 CFR 36.4360a(c), presale requirements (verified in the current CFR text via govinfo.gov): bona fide agreements of sale by non-declarant purchasers for 70 percent of the project’s total units before VA guaranty of the first unit loan, with case-by-case reductions possible. Used to ground the 70 percent figure cited in Topic 4.
• Current VA Condo Report location verified at https://lgy.va.gov/lgyhub/condo-report (VA Loan Guaranty LGY Hub; JavaScript-driven, so only the page shell was retrievable by text fetch). Lender guides (valoannetwork.com condo lookup page, September 2026; kentuckymortgageblog.com, September 2026) confirm this is the current official lookup and that VA and FHA/HUD approvals are separate lists.
• KnowVA (VA’s official knowledge base) was not used: it is JavaScript-gated and does not yield chapter text to text fetching, so the hosted verbatim copy above was used instead. One lender source (valoannetwork.com) describes the KnowVA chapter as updated August 19, 2026; I could not verify that stamp or any text changes independently, so the post follows the Change 3 (2003) chapter text with the circulars above marking the known supersessions.
• Notes on currency: the single-unit condo approval path described by some current lender guides (military.com, newdayusa.com) as introduced around 2019 could not be verified in any official VA circular or regulation, so it is addressed in the FAQ only as an unverified claim, not as a VA option. P.L. 119-31 (VA home loan partial-claim legislation) and VA Circular 26-25-1 (March 31, 2025, construction inspections) concern servicing and construction respectively and do not touch Chapter 16 text. The Blue Water Navy Act (2019) concerns funding fees and loan limits, likewise outside this chapter.

I am a mortgage loan originator, not the VA. This article walks through the VA Lenders Handbook as of the last-reviewed date above, with the newer circulars that superseded parts of this chapter called out in the amber boxes. Story illustrations are based on situations I see in my pipeline, and no story describes any one borrower’s file. Only VA determines program requirements, lender requirements vary, and final approval always depends on the lender underwriting your file.