The VA loan is widely used by active-duty and veteran service members because it’s buyer-friendly, requires no down payment or private mortgage insurance, and offers competitive interest rates. But the VA also offers another financing option that doesn't require VA loan eligibility: the VA Vendee Loan Program.
The VA Vendee Loan Program is a seller-financing program for eligible VA-owned properties. It's an affordable loan product available to military buyers, non-military buyers, and investors.
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1. What is the VA Vendee Loan Program?
When certain properties with VA-guaranteed loans go through foreclosure, the VA may ultimately acquire them. These become VA Real Estate Owned (REO) properties. VA Vendee Loans are available for the REO property inventory that the VA owns. It's a solid alternative to traditional loan financing.
The program gives home shoppers the opportunity to buy foreclosed homes that the VA owns. Financing is currenlty handled through VRM Lending. They work with the VA to resell the properties and originate the loans. If you’re a potential owner-occupant, you may qualify to finance up to 100% of the loan amount, but you’ll still be responsible for closing costs. Investors typically need to bring at least a 5% down payment to qualify.
If you offer more than the property’s estimated value, you may need to pay the difference out of pocket unless an appraisal supports the higher price. A VA loan closing calculator can be a useful tool for estimating how much you need to budget for.
2. Who can apply for a VA Vendee Loan?
The VA allows any qualified buyer the chance to purchase a listed home. Veterans and active-duty military are welcome to apply, as well as non-military buyers and investors, although investors follow a slightly different set of guidelines.
3. What are the VA Vendee Loan’s benefits?
The VA Vendee Loan is an affordable option for buyers who might not qualify for other loans. Some of its perks are similar to the VA loan.
- Financing with little to no money down for qualifying owner-occupants, with conditions
- 15- or 30-year loan term options
- No private mortgage insurance is required
- Often no appraisal is required unless the loan amount is higher than the property’s value
- Funding fees and origination fees can sometimes be rolled into the loan
- No prepayment penalties
- Possible for the seller to pay some of the closing costs
4. What are the Vendee program’s disadvantages?
Depending on the type of borrower you are, you might find a couple of downsides to the VA Vendee loan.
Homes Sold As Is
Owner-occupants on a tight budget may want to think twice about buying a home in its current condition. VA-owned REO homes are generally sold as is, so buyers should pay close attention to the property's condition and budget for possible repairs. A home inspection before closing is allowed, so you’ll have a good idea of what work lies ahead if you move forward with the purchase. If the inspection reveals serious issues, however, you can choose to walk away.
Investors typically factor repairs into their budgets rather than allowing the results of the inspection to dissuade them from buying the property.
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VA REO Homes Are Limited
There aren’t many VA REO homes available at any given time. If you’re locked into a location, your search could stretch for years. If you have the freedom to move or buy property as an investor, you’ll have more opportunities. A VA Vendee Loan could be worthwhile if your priority is favorable financing rather than a specific location.
5. What are the guidelines for investors looking at a VA Vendee Loan?
Unlike the standard VA loan requirements, the Vendee program is open to investors. Take a look at some of the investor guidelines.
- Opportunity to close with as little as 5% down
- The VA allows Vendee Loans for rental investment properties
- Rental income may be considered during qualification, subject to current Vendee underwriting requirements
6. Who manages the VA's properties and Vendee financing?
The VA uses contractors to manage and market its REO inventory and administer the Vendee program. Vendor Resource Management (VRM) currently manages VA REO properties through its contract with the VA, while eligible properties are listed through VRM Properties. Buyers interested in Vendee financing can work with the mortgage provider assigned to the property.
7. What is the qualification process for a VA Vendee Loan?
Like other loans, you’ll pre-qualify with VRM Lending before starting the buying process. Loan officers review your finances, and underwriters confirm that you meet the requirements.
After you’ve chosen a property from the available inventory, you’ll submit an official application. Expect the usual documents: income verification, credit checks, property information, and Social Security number. If all goes well, your application goes through a final underwriting review.
Once the loan receives final approval and you've met closing requirements, you'll sign the closing documents and complete the purchase.
The VA Vendee Loan Program is an attractive option for those who may not qualify for a standard VA loan or for non-military buyers and investors looking for affordable terms. While similar to the VA loan, in that you can often avoid a down payment and finance most of the loan, the key difference is that the program is tied specifically to VA-owned REO homes and is available to a wider pool of buyers, including investors.
For more information about different ways to finance a home, see MilitaryByOwner's free guide below.
