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The Nuts and Bolts of a VA Offer
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The Nuts and Bolts of a VA OfferDaniel Dobbs2025-03-06T10:34:16-08:00
VA financing is just one of the benefits earned by our military service members.
Many of our service heroes will make California their home, expanding your pool of buyers.
The key to working with VA buyers is presenting an offer properly to the listing agent so they can educate their sellers.
Myths about VA Financing
Seller’s Costs
One of the more frequent objections to VA offers is the misconception of the costs to sellers (vs. more traditional types of financing).
When a buyer’s chosen lender is NOT charging an “origination fee” (virtually no lender does), the only seller’s cost is they must pay for a “Termite Report” and must be noted in the RPA Agreement.
All VA loans require a termite clearance to COE.
It’s ONLY negotiable which party pays for repairs and the COE clearance report.
Editor’s Note: VA (and FHA) buyers should never pay points (or any fees) for the loan transaction. They can often use lender rebates to pay closing costs and streamline the refinance to a market interest rate seven months later.
Benefits of VA Financing
Property Types
VA is for owner-occupied residences only but can be used to purchase up to 4 units.
Quick Automated Loan Approval
Buyers should submit accurate financial data to their lenders before presenting the offer to overcome sellers’ objections to VA offers.
Once their loan is DU-approved, the loan funding is guaranteed.
Shorter Waiting Periods after “Credit Events
If a VA buyer has had a short sale, foreclosure or bankruptcy, the wait time is just 2 years.
No Monthly Mortgage Insurance
VA loans have no monthly mortgage insurance premiums giving veterans more purchasing power.
For comparison: A $400k FHA/Fannie loan has a monthly premium (approx.) $300.
A VA buyer has (approx.) $25k more in home buying power without the monthly mortgage insurance premium.
Funding Fee
VA requires a minimum “funding fee” of 2.85% of the loan amount that can be paid in full or financed. For veterans receiving a VA disability benefit: The funding fee is waived or prorated!
The funding fee is waived for all service members who received the Purple Heart for being wounded in combat.
In the future, if the (now) VA homeowner wishes to streamline refinance the same home, pays only one-half of a point (.5%) of the funding fee.
VA “DTI” Flexibility
A VA Buyer can have a “front end” debt-to-income ratio as high as 55%, a high “residual income level”, and/ or savings in the bank. The minimum residual income requirement for a household of 3 in California is $990 per month.
NO Loan Limits:
In 2018, the confusing myriad of calculations involved in determining what loan amount a veteran could qualify for was akin to “quantum physics.”
Now, there are no loan limits!!!!!!
If a veteran makes a million dollars, he can probably qualify for a two-million dollar loan with zero down.
In Closing
In my 40+ year career, I’ve found service members are the easiest buyers to work with. They are always “squared away” on their paperwork, and their association with other veterans provides a greater rate of referrals than a typical buyer.
Do you golf or know others who do?
Then please pass this along to them for our 16th annual tournament (“Tee it Up for Marines”), held on October 17, 2025, at Camp Pendleton and Hosted by the City of Mission Viejo.
All proceeds go to: 1st Battalion 1st Marines and the tournament is hosted “on base” at the Marine Memorial Golf Course ; the 2021 tournament netted $25k for their families.
You can bring a foursome, or we’ll partner you up with a Marine hero for the day.
Copywrite © August, 2018 Daniel Dobbs
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