What Sellers Need to Know About VA Loans

What Sellers Need to Know About VA Loans

Home financing comes in many different forms and it is very important that you, as the seller, realize that not all financing is the same and some has strict rules governing how they are handled. The VA Loan program is one example, and it is only available to US military veterans and active-duty members of the US military and their spouses.

This article was designed to provide information about the VA Loan program from the perspective of the seller. After doing research for this article, we came up with some pros and cons to help you understand the benefits to you as the seller.

Thinking about getting a VA Loan? Check out our article: The Pros and Cons of VA Loans

Pros and Cons of Selling Your Home to a VA Loan Buyer

Pros of Selling Your Home to a VA Loan Buyer

1. Less underwriting criteria than traditional loans

Underwriting mortgage loans involve certain criteria to be met. Fortunately, the VA Loan is guaranteed by the US Government and this allows the lenders who have been approved by the VA to follow somewhat lower standards. This tends to allow a person with a lower credit score or other factors to be qualified for a home loan.

2. The likelihood of closing is higher

While no loan closing is a guarantee, over the years, VA Loans have closed at just as high of a rate as other more traditional financing sources. Even though there are some extra steps involved with financing through the VA Loan program, many sellers mistakenly assume that it is more difficult to sell to a buyer using a VA Loan.

3. They tend to have more buying power

One of the primary benefits of selling your house to a VA Loan buyer, is that the buyer is not required to come up with any down payment (traditional loans usually require from 3% up to as high as 20% down payment). Since they don’t have to worry about a down payment, the buyer usually has additional money available to afford more of a house. This equates to more buying power than a person using a traditional mortgage loan.

Cons of Selling Your Home to a VA Loan Buyer

1. Strict habitability requirements

Under the VA Loan Program, the US Government established several requirements to be approved for a loan. The requirements are referred to as Minimum Property Requirements or MPR’s and they are strictly enforced to protect the buyer. The MPR’s are designed to provide a baseline for the habitability of a property. Each of the properties being considered by a person requesting a VA Loan must be safe, sound, and sanitary. All properties must be inspected and a report filed with the VA to be considered for approval under the VA Loan Program.

2. Requires a special appraisal

While all loans require an appraisal as part of the approval process, the VA Loan Program requires a special kind of appraisal. The VA Appraisal is designed to ensure that all of the requirements of MPR are met. The person doing the appraisal must send a report to the VA for review stating the property's value and whether it meets all of the MPR requirements. The VA must then sign off on the report for the person to be able to get approved for the VA Loan to purchase the house.


In this article, we’ve reviewed the advantages and disadvantages to selling your home to a buyer using a VA loan. Be sure to consult with your hired real estate professional and follow all laws, rules and regulations when conducting a real estate transaction.

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