How Does the VA Appraisal Process Work

By Ann Johnson

When you use a loan to purchase a home, the lender wants to make sure the property value is equal to or exceeds the purchase price. Loaning too much money on property is bad business for the lender and the borrower. A Veterans Affairs loan, like other home loans, requires an appraisal from a licensed or certified appraiser.

A VA loan is guaranteed by the United States Department of Veterans Affairs. The VA does not fund the loan; it only provides a guarantee, similar to private mortgage insurance. This allows qualifying borrowers to purchase a home with little or no down payment. VA loans are funded by lenders approved by Veterans Affairs, and the lenders must follow VA guidelines, including rules and procedures involving appraisals. Those who might qualify for a VA loan include veterans, surviving spouses of veterans and active service personnel.

A certified or licensed appraiser is a real estate professional who prepares an appraisal. An appraisal is an estimate of value, reflecting what a ready, willing and able buyer might pay in the current market. When appraising residential properties, an appraiser uses recent sold prices of comparable properties in the neighborhood of the subject property to determine an estimate of value. In a VA loan, a state-licensed appraiser is used.

An eligible borrower under the VA loan program contacts a VA-approved lender to begin the loan process. The lender then obtains a VA number for the borrower, which is done online. The number identifies the borrower’s loan. When the buyer makes an offer on property, the buyer’s offer is contingent on satisfactory appraisal. The lender orders the appraisal, using a state-licensed appraiser. The lender can monitor the process of the loan and appraisal using the VA number.

The lender sends a VA form to the appraiser to complete. The appraiser returns his report to the lender and the VA, letting them know if the property is sufficient collateral for the proposed loan. The appraiser does not provide a guarantee or warranty involving structural defects to the lender, VA or borrower. The appraiser’s estimate of value only reflects the value of the property on the day of the appraisal and does not indicate what the property might be worth in a year or some other time frame.

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