There’s good news to report when it comes to obtaining VA financing on a home with a non-permitted addition in Hawaii!
As of July 10, 2017, appraisals with permit issues (as long as they meet the VA’s Minimum Property Requirements) will be issued “As is.” This means that the lack of an existing permit for an addition or improvement will not prevent a home from obtaining VA financing, and it will no longer be necessary to obtain a VA waiver for homes that were not properly permitted. However, the appraiser will not give value to the non-permitted area.
Prior to this update, Hawaii homebuyers attempting to use their VA home loan benefits on a property with a non-permitted addition were required to either obtain a VA waiver, get a retroactive permit, or tear down the non-permitted addition due to prior issues with foreclosures.
Now, the VA’s policy on non-permitted additions in Hawaii is consistent with national policy as well as Fannie Mae, Freddie Mac, FHA and USDA who all do their appraisals this way. Notably, excluding a non-permitted area from valuation of a home could lead to a slightly lower value, but no lower than an appraisal with any other loan program. If a permit is obtained, the value can be included in the appraisal.
There are two major benefits for VA customers with this new non-permitted improvement appraisal policy: