What to Know About VA-Backed Properties

Posted by Lauren Schneider on Tuesday, February 16th, 2021 at 8:45am.

What Servicepersons Need to Know About Securing a VA-Backed PropertyIt's widely known that service persons of active and retired status qualify for home loans backed by the Department of Veteran's Affairs. However, there are certain situations in which the responsible party cannot meet their obligations under the program, and these properties often become available to civilians.

VA real estate owned properties (REOs) come under the possession of the Office of Veterans Affairs when a home is foreclosed on. Known as VA REO homes, these loans are often taken out with VA mortgages, so they go up for resale with requirements of a low or no down payment and can be secured at fair market pricing in most situations. The following information explores the process of buying a VA-owned property.

For informational purposes only. Always consult with a licensed mortgage or home loan professional before proceeding with any real estate transaction.

Before Buying a VA-Backed Property

Many VA-owned properties are in need of repairs after a repossession, as some may not meet building codes or even have a value near the standard appraisal amount. These types of fixer uppers are often resold under what is known as the VA Vendee Financing Program, aka VA Vendee Loans.

Unless buyers are prepared to make self repairs or have expendable funds to pay for renovations, an REO property might not be the best option. That being said, good deals can be found in this real estate realm, but awareness of the situation walking in will lead to greater satisfaction with the purchase overall.

VA Vendee Loans For Veterans Affairs Home Foreclosures

The process for obtaining a VA Vendee loan is different from applying for a traditional VA loan that active and former military members will apply for. Available to investors, non-vets, and owner-occupiers, the VA loans are very specific to REO homes that will be used as primary residences or to serve as an investment, so specific guidelines must be met to qualify for a Vendee loan.

Some benefits of obtaining a VA Vendee loan to buy an REO property include:

  • No or low down payments
  • 15- to 30-year loan terms
  • Mortgage insurance not required
  • Origination fees may be included for qualified borrowers
  • No limitations on number of VA REO ownership of properties

Those considering these loans with the intent of investment purposes will likely be called upon for a down payment even on fixer-upper properties. These investors will also be required to get such homes up to local coding and standards to maintain eligibility on the loan. The good news is that credit scores may not be as pertinent in securing a loan versus traditional mortgage options.

Obtaining a Vendee Loan

There are many options when it comes to VA REO homes, but the experience will vary for each individual buyer. The laws and regulations change from state to state, and a qualified loan officer can assist buyers with the best approach for their situation. Veterans will naturally receive the best interest rates and loan options, but the VA Vendee loan can become a truly viable option for those looking to buy a fixer-upper without needing to qualify for traditional mortgages.

Looking For An Affordable Home?

Those looking for a home that is free of huge down payments but aren't intimidated by having to put a bit of work in should check out the options of the real estate market that are available under the VA program that have been foreclosed on. Local real estate agents can help them find out if they meet the qualifications under the VA REO loan option.

For informational purposes only. Always consult with a licensed mortgage or home loan professional before proceeding with any real estate transaction.

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