Civilians Get VA Loans

November 7 2010 (Jeff Alan)
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One of the benefits of serving your country is the availability of the VA Loan program. One of its most coveted benefits is the ability of qualified service members to purchase with no money down. What few civilians are aware of is a little publicized program that allows them to purchase VA foreclosure properties that utilize many of the same benefits that are normally only available to American service members.

The name of the program is called the Vendee Financing Program and it allows civilians to purchase veteran-owned homes that wind up in foreclosure. Civilian borrowers interested in purchasing these properties enjoy the same types of financial benefits as their veteran counterparts.

This program has long been a favorite of real estate investors, who can purchase multiple properties using this program. But it’s also a great way for prospective home buyers to maximize their purchasing power.

Here are some of the Vendee Financing Program’s biggest benefits:

  • Low and even no down payments on owner-occupied properties
  • No private mortgage insurance or mortgage insurance premiums
  • Sellers can pay up to 6 percent of the sale price to cover closing costs and other qualified expenses
  • No prepayment penalties

Just like most VA borrowers, prospective civilian borrowers can secure fixed-rate loans at both 15- and 30-year terms and are required to pay a Funding Fee to the agency (in this case, it’s currently 2.25 percent of the loan amount). Borrowers in most states will have to put up some earnest money, too.

Since the VA doesn’t actually make loans, they just guarantee them; credit scores and appraisals are generally not part of the underwriting process. The VA is typically more interested in verifiable income to help ensure consistent repayment. But the lenders who engage in this type of financing will certainly take a closer look when it comes to underwriting — they can apply degrees of scrutiny beyond what the VA mandates.

Tags: VA, VA loans, vendee financing program, foreclosures, veterans benefits, service members