US Code

Public Law 119-73 (01/23/2026)

38 U.S.C. § 3704

Restrictions on loans

(a)
No loan for the purchase or construction of residential property shall be financed through the assistance of this chapter unless the property meets or exceeds minimum requirements for planning, construction, and general acceptability prescribed by the Secretary; however, this subsection shall not apply to a loan for the purchase of residential property on which construction is fully completed more than one year before such loan is made.
(b)
Subject to notice and opportunity for a hearing, the Secretary may refuse to appraise any dwelling or housing project owned, sponsored, or to be constructed by any person identified with housing previously sold to veterans under this chapter as to which substantial deficiencies have been discovered, or as to which there has been a failure or indicated inability to discharge contractual liabilities to veterans, or as to which it is ascertained that the type of contract of sale or the methods or practices pursued in relation to the marketing of such properties were unfair or unduly prejudicial to veteran purchasers. The Secretary may also refuse to appraise any dwelling or housing project owned, sponsored, or to be constructed by any person refused the benefits of participation under the National Housing Act pursuant to a determination of the Secretary of Housing and Urban Development.
(c)
(1)
Except as provided in paragraph (2) of this subsection, no loan for the purchase or construction of residential property shall be financed through the assistance of this chapter unless the veteran applicant, at the time that the veteran applies for the loan, and also at the time that the loan is closed, certifies in such form as the Secretary may require, that the veteran intends to occupy the property as the veteran’s home. Except as provided in paragraph (2) of this subsection, no loan for the repair, alteration, or improvement of residential property shall be financed through the assistance of the provisions of this chapter unless the veteran applicant, at the time that the veteran applies to the lender for the loan, and also at the time that the loan is closed, certifies, in such form as may be required by the Secretary, that the veteran occupies the property as the veteran’s home. Notwithstanding the foregoing provisions of this subsection, in the case of a loan automatically guaranteed under this chapter, the veteran shall be required to make the certification only at the time the loan is closed. For the purposes of this chapter the requirement that the veteran recipient of a guaranteed or direct home loan must occupy or intend to occupy the property as the veteran’s home means that the veteran as of the date of the veteran’s certification actually lives in the property personally as the veteran’s residence or actually intends upon completion of the loan and acquisition of the dwelling unit to move into the property personally within a reasonable time and to utilize such property as the veteran’s residence. Notwithstanding the foregoing requirements of this subsection, the provisions for certification by the veteran at the time the veteran applies for the loan and at the time the loan is closed shall be considered to be satisfied if the Secretary finds that (1) in the case of a loan for repair, alteration, or improvement the veteran in fact did occupy the property at such times, or (2) in the case of a loan for construction or purchase the veteran intended to occupy the property as the veteran’s home at such times and the veteran did in fact so occupy it when, or within a reasonable time after, the loan was closed.
(2)
In any case in which a veteran is in active-duty status as a member of the Armed Forces and is unable to occupy a property because of such status, the occupancy requirements of this chapter shall be considered to be satisfied if—
(A)
the spouse of the veteran occupies or intends to occupy the property as a home and the spouse makes the certification required by paragraph (1) of this subsection; or
(B)
a dependent child of the veteran occupies or will occupy the property as a home and the veteran’s attorney-in-fact or legal guardian of the dependent child makes the certification required by paragraph (1) of this subsection.
(d)
Subject to notice and opportunity for a hearing, whenever the Secretary finds with respect to guaranteed or insured loans that any lender or holder has failed to maintain adequate loan accounting records, or to demonstrate proper ability to service loans adequately or to exercise proper credit judgment or has willfully or negligently engaged in practices otherwise detrimental to the interest of veterans or of the Government, the Secretary may refuse either temporarily or permanently to guarantee or insure any loans made by such lender or holder and may bar such lender or holder from acquiring loans guaranteed or insured under this chapter; however, the Secretary shall not refuse to pay a guaranty or insurance claim on loans theretofore entered into in good faith between a veteran and such lender. The Secretary may also refuse either temporarily or permanently to guarantee or insure any loans made by a lender or holder refused the benefits of participation under the National Housing Act pursuant to a determination of the Secretary of Housing and Urban Development.
(e)
Any housing loan which is financed through the assistance of this chapter and to which section 3714 of this chapter applies shall include a provision that the loan is immediately due and payable upon transfer of the property securing such loan to any transferee unless the acceptability of the assumption of the loan is established pursuant to such section 3714.
(f)
42 U.S.C. 12709 A loan for the purchase or construction of new residential property, the construction of which began after the energy efficiency standards under section 109 of the Cranston-Gonzalez National Affordable Housing Act (), as amended by section 101(c) of the Energy Policy Act of 1992, take effect, may not be financed through the assistance of this chapter unless the new residential property is constructed in compliance with the standards established under such section 109, as in effect on the date of such construction.

Pub. L. 85–85772 Stat. 1206Pub. L. 86–73, § 373 Stat. 156Pub. L. 86–665, § 574 Stat. 532Pub. L. 89–117, title II, § 217(b)79 Stat. 473Pub. L. 90–19, § 25(2)81 Stat. 28Pub. L. 91–506, § 2(d)84 Stat. 1108Pub. L. 93–569, § 2(d)88 Stat. 1863Pub. L. 94–324, § 7(7)90 Stat. 721Pub. L. 97–295, § 4(64)96 Stat. 1309Pub. L. 100–198101 Stat. 1319Pub. L. 100–322, title IV, § 415(c)(3)102 Stat. 551Pub. L. 101–237, title III, § 313(b)(1)103 Stat. 2077Pub. L. 102–83, § 5(a)105 Stat. 406Pub. L. 102–486, title I, § 101(c)(2)106 Stat. 2787Pub. L. 103–446, title IX, § 903108 Stat. 4676Pub. L. 112–154, title II, § 207126 Stat. 1179Pub. L. 117–328, div. U, title II, § 203(b)136 Stat. 5451(, , , § 1804; , , ; , , ; , , ; , , ; , , ; , (e), , , 1864; , (8), , ; , , ; , §§ 8(a)(1), 10(b), , , 1323; , , ; , , ; renumbered § 3704 and amended , (c)(1), , ; , , ; , , ; , , ; , , .)

Editorial Notes

References in Text

act June 27, 1934, ch. 84748 Stat. 1246section 1701 of Title 12The National Housing Act, referred to in subsecs. (b) and (d), is , , which is classified principally to chapter 13 (§ 1701 et seq.) of Title 12, Banks and Banking. For complete classification of this Act to the Code, see and Tables.

Amendments

Pub. L. 117–3282022—Subsec. (f). substituted “the standards established under such section 109, as in effect on the date of such construction” for “such standards”.

Pub. L. 112–1542012—Subsec. (c)(2). amended par. (2) generally. Prior to amendment, par. (2) read as follows: “In any case in which a veteran is in active duty status as a member of the Armed Forces and is unable to occupy a property because of such status, the occupancy requirements of—

“(A) paragraph (1) of this subsection;

section 3710(a) of this title“(B) paragraphs (1) through (5) and paragraph (7) of ;

section 3712(a)(5)(A)(i) of this title“(C) ; and

section 3712(e)(5) of this title“(D) ;

shall be considered to be satisfied if the spouse of the veteran occupies the property as the spouse’s home and the spouse makes the certification required by paragraph (1) of this subsection.”

Pub. L. 103–44612 U.S.C. 1749aa1994—Subsecs. (e) to (g). redesignated subsecs. (f) and (g) as (e) and (f), respectively, and struck out former subsec. (e) which read as follows: “No loan for the purchase or construction of new residential property (other than property served by a water and sewerage system approved by the Secretary of Housing and Urban Development pursuant to title X of the National Housing Act ( et seq.)) shall be financed through the assistance of this chapter, except pursuant to a commitment made prior to , if such property is not served by a public or adequate community water and sewerage system and is located in an area where the appropriate local officials certify that the establishment of such systems is economically feasible. For purposes of this subsection, the economic feasibility of establishing public or adequate community water and sewerage systems shall be determined without regard to whether such establishment is authorized by law or is subject to approval by one or more local governments or public bodies.”

Pub. L. 102–4861992—Subsec. (g). added subsec. (g).

Pub. L. 102–83, § 5(a)section 1804 of this title1991—, renumbered as this section.

Pub. L. 102–83, § 5(c)(1)Subsec. (c)(2). , substituted “3710(a)” for “1810(a)” in subpar. (B), “3712(a)(5)(A)(i)” for “1812(a)(5)(A)(i)” in subpar. (C), and “3712(e)(5)” for “1812(e)(5)” in subpar. (D).

Pub. L. 102–83, § 5(c)(1)Subsec. (f). , substituted “3714” for “1814” in two places.

Pub. L. 101–2371989—Subsecs. (a) to (c)(1), (d). substituted “Secretary” for “Administrator” wherever appearing.

Pub. L. 100–322, § 415(c)(3)(A)1988—Subsec. (c)(2)(C). , substituted “1812(a)(5)(A)(i)” for “1819(a)(5)(A)(i)”.

Pub. L. 100–322, § 415(c)(3)(b)Subsec. (c)(2)(D). , substituted “1812(e)(5)” for “1819(e)(5)”.

Pub. L. 100–322, § 415(c)(3)(C)Subsec. (f). , substituted “section 1814” for “section 1817A” in two places.

Pub. L. 100–198, § 8(a)1987—Subsec. (c). , designated existing provision as par. (1), substituted “Except as provided in paragraph (2) of this subsection, no” for “No” in first and second sentences, and added par. (2).

Pub. L. 100–198, § 10(b)Subsec. (f). , added subsec. (f).

Pub. L. 97–29512 U.S.C. 1749aa1982—Subsec. (e). inserted “( et seq.)” after “the National Housing Act”, and substituted “” for “the date of the enactment of the Housing and Urban Development Act of 1965”.

Pub. L. 94–324, § 7(7)1976—Subsec. (c). , substituted “the veteran” for “he” in six places and “the veteran’s” for “his” wherever appearing.

Pub. L. 94–324, § 7(8)Subsec. (d). , substituted “the Administrator may” for “he may”.

Pub. L. 93–569, § 2(e)1974—Subsec. (b). , struck out “under section 512 of that Act” after “determination of the Secretary of Housing and Urban Development”.

Pub. L. 93–569, § 2(d)Subsec. (c). , inserted provision that, the foregoing provisions notwithstanding, in the case of an automatically guaranteed loan, the veteran is required to make certification only at the time of loan closing.

Pub. L. 93–569, § 2(e)Subsec. (d). , struck out “under section 512 of that Act” after “determination of the Secretary of Housing and Urban Development”.

Pub. L. 91–5061970—Subsec. (b). substituted “Subject to notice and opportunity for a hearing, the” for “The”.

Pub. L. 91–506Subsec. (d). substituted “Subject to notice and opportunity for a hearing, whenever” for “Whenever”.

Pub. L. 90–191967—Subsecs. (b), (d), (e). substituted “Secretary of Housing and Urban Development” for “Federal Housing Commissioner”.

Pub. L. 89–1171965—Subsec. (e). added subsec. (e).

Pub. L. 86–6651960—Subsec. (c). inserted sentence respecting satisfaction of provisions for certification by the veteran at the time he applies for the loan and at the time the loan is closed.

Pub. L. 86–73, § 3(a)1959—Subsec. (b). , authorized the Administrator to refuse to appraise any property if the builder or sponsor of the property had been barred by the Federal Housing Commissioner from participation in the FHA insurance program.

Pub. L. 86–73, § 3(b)Subsec. (d). , authorized the Administrator to refuse to guarantee or insure loans if the lender or holder of the loans has been barred by the Federal Housing Commissioner from participation in the FHA insurance program.

Statutory Notes and Related Subsidiaries

Effective Date of 1987 Amendment

Pub. L. 100–198, § 8(c)101 Stat. 1320

“The amendments made by this section [amending this section and sections 1810 and 1819 [now 3710 and 3712] of this title] shall apply with respect to loans made more than 30 days after the date of the enactment of this Act [].”
, , , provided that:

Effective Date of 1976 Amendment

Pub. L. 94–324section 9(a) of Pub. L. 94–324section 3701 of this titleAmendment by effective , see , set out as a note under .

Effective Date of 1974 Amendment

Pub. L. 93–569section 10 of Pub. L. 93–569section 3702 of this titleAmendment by effective , see , set out as a note under .