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Can you buy a home from a relative with a VA loan?
Can you buy a home from a relative using a VA loan?
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Yes, it is possible to use a VA (Veterans Affairs) loan to purchase a home from a relative. However, there are some specific requirements and guidelines that need to be followed:
Eligibility: The buyer must be an eligible active-duty military member, veteran, or surviving spouse who meets the VA loan eligibility criteria.
Occupancy Requirement: The VA loan must be used to purchase a primary residence that the buyer intends to occupy as their primary home. Investment properties or vacation homes are not eligible.
Reasonable Value: The purchase price of the home must not exceed its reasonable value as determined by a VA-approved appraiser. The appraiser will assess the home’s market value based on comparable sales in the area.
Arm’s Length Transaction: The transaction must be considered an “arm’s length” transaction, meaning that the buyer and seller are unrelated parties who are acting in their own self-interest and are not subject to any pressure or duress from the other party.
No Identity of Interest: There can be no “identity of interest” between the buyer and seller, which means that they cannot have a family or business relationship that could potentially influence the transaction. If the buyer and seller are related, additional documentation and disclosure may be required to prove that the transaction is truly arm’s length and that there is no identity of interest. This may include providing: A written certification from the buyer and seller stating that the transaction is arm’s length. Evidence that the purchase price is consistent with the property’s appraised value. Proof that the seller has owned and occupied the property as their primary residence for a reasonable period of time. It’s important to note that VA loan rules are strict when it comes to buying from relatives to prevent inflated prices or fraudulent transactions. Working closely with an experienced VA lender and being fully transparent about the relationship is crucial.