A VA Real Estate Owned (REO) property can become the possession of the VA after a home is foreclosed and a third party does not purchase at the foreclosure sale. There are many types of VA REO properties available including single family, condos, townhomes and multi-family dwellings. A list can be obtained here.
Both veterans and non-veterans can purchase VA-owned properties. How a property is financed is the buyer’s choice. Often a VA loan is used, and sometimes other means are used to pay for VA-owned properties.
One popular option is the VA Vendee Financing program. The Vendee loan product is offered only to individuals wishing to finance VA REO properties.
Vendee Financing Quick Facts:
- Military and civilian buyers alike can apply for Vendee Financing
- Owner occupancy and non-owner occupancy allowed
- Homes to be owner-occupied can be obtained with as little as zero down
- Non-owner occupancy requires 5% down or more and property management experience
- Seller can pay up to 6% of the sales price in closing costs
- VA Funding Fee is 2.25%
- No private mortgage insurance
- No pre-payment penalties
- Appraisal is not required for underwriting
- Vendee Financing can be obtained directly through the Veterans Administration
- For non-owner occupancy, there is no limit to the number of investment properties
- Assumable
- Vendee financing has 15- and 30-year fixed-rate terms
- VA REO properties are sold “AS IS” at or below fair market value
If the buyer is VA-eligible, then a military mortgage is a popular zero-down option for financing a VA REO property. Here are some quick VA loan facts:
- Zero money down within conforming loan limits
- No private mortgage insurance
- No pre-payment penalties
- VA Funding Fee from 0% to 3.3%
- VA loans are made by approved lenders
- Owner occupancy required
- Assumable
- VA appraisal required
- Up to 4% of closing costs may be paid by seller
Though a minimum credit score is not published in either guidelines, both VA and Vendee borrowers must prove to be a good credit risk.
Ready to Get Started?
If you're ready to get started, or just want to get more information on the process, the first step is to get multiple rate quotes with no obligation. You can then discuss qualifications, debt to income ratios, and any other concerns you have about the process with the lenders.
