Civilian Borrowers Can Tap into VA Loan Program's Significant Benefits Through Vendee Program

The VA Loan Guaranty program has some of the most potent home-buying benefits around, chief among them the ability of qualified service members to purchase with no money down.  But few civilians are aware of a little-publicized program that allows them to purchase VA foreclosure properties using many of the same benefits provided to American service members.

It’s called the Vendee Financing Program. Some of the nation’s veteran-owned homes that wind up in foreclosure enter a pool of properties open to non-veterans through this program.

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

Prospective borrowers can secure fixed-rate loans at both 15- and 30-year terms. Just like most VA borrowers, civilians who utilize the Vendee Financing Program 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.

As far as the VA is concerned, 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 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.

Consumers can go online to search for Vendee homes in their area.

Image: Eric Beato