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Benefits of VA Loans over Conventional Loans

Most VA loans for new houses require the builder to provide the purchaser with a 1-year warranty. Inspections are made at appropriate stages to ensure that the house was built according to the VA approved plans and specifications (in some cases, the builder may provide a 10-year warranty plan, in which only one final inspection is required). The 1-year warranty begins on the date that the buyer gets the title to the house, or moves in (which ever occurs first). The warranty only applies, however, to substantial nonconformity to the house plans. Additionally, the warrantor must be notified of any problems in writing prior to the expiration of the warranty.

When buying a new home that has not been previously occupied and is less than 1 year old, the warranty works a little differently. During building, if the home was not inspected by the VA of FHA, the VA typically require the builder to provide the buyer with an insured one year protection plan for the home. This plan includes three major aspects. The first is that the builder provides an insurance backed warranty for the first year to cover any defects that were a cause of faulty workmanship or a cause of defective materials. Second, the builder must provide an insurance backed warranty during the second year for piping, wiring, duct work, etc. of the heating, cooling, plumbing, and electrical systems. Third, the builder must also provide direct insurance from the third through tenth year for any structural problems that seriously affect the livability of the home.

In cases where VA loan holders purchase a home that has been previously occupied, the builder is not obligated to provide any type of warranty to the buyer, nor is there much the buyer can do to take action against the seller. For this reason, it is very important to ensure that a previously occupied house is in proper condition before purchasing it.

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