Implications Of Accepting An Offer Using VA Financing

Dear Phyllis,
We received an offer using a VA loan. I
would love to support a veteran if I can.
What are the implications of accepting
an offer using VA financing? — Curious

Dear Curious,
A VA loan is a home loan program
backed by the U.S. Department of
Veterans Affairs and designed for eligible
military service members, and veterans
The property must meet certain
Minimum Property Requirements
(MPRs) during the VA appraisal. These
guidelines ensure the home is safe, sound,
and structurally secure. In some cases,
the appraiser may require the seller to
make minor repairs before the loan can
close. Examples would be that there is no
peeling paint or broken window panes.
VA buyers can purchase with little
or no down payment, which helps
expand the pool of qualified buyers.
The overall transaction process is very
similar to other financed offers. The
primary differences are the VA appraisal
standards and the buyer’s loan approval
through a VA-approved lender.
Another key difference involves closing
costs. VA rules prohibit buyers from
paying certain fees considered “non-
allowable” to prevent excessive charges.

If those fees are charged, they must
typically be paid by the lender, seller, or
real estate agents.
Examples of non-allowable VA fees
include:

• Lender/Broker Fees: Loan application
or processing fees, underwriting fees,
broker fees, and interest rate lock-in
fees.
• Professional Fees: notary fees
•Administrative Costs: Document
preparation, postage, courier, and
photograph fees.
• Certain Inspection/Appraisal Costs:
Some lender-required inspections not
mandated by the VA Notice of Value
(NOV).
•Other Charges: Prepayment
penalties, tax service fees, and some
escrow fees.

Important considerations:
• The 1% Rule: Some lenders charge
a flat 1% origination fee instead of
itemizing costs. When they do, many
additional administrative fees cannot
be charged to the buyer.
• Who Pays the Fees: If non-allowable
costs appear, they must typically be
paid by the seller, lender, or agents
rather than the VA buyer.
• Seller Concessions: VA guidelines
limit seller concessions to 4% of the
home’s appraised value.

In most cases, a VA loan simply means
the buyer has earned a benefit through
military service. With proper pricing and
disclosures, most VA transactions can
close just as smoothly as conventional
loan sales.
Phyllis