Why do VA offers get passed over?
Because listing agents remember something they heard in 2009 and never checked again.
We are in the Inland Empire. March Air Reserve Base is here, Norco and Riverside have deep veteran populations, and VA-eligible buyers are a meaningful share of this market. They still lose competitive offers to conventional buyers over objections that are either outdated or flatly wrong.
Here are the five that come up most, and what the VA actually says.
"VA appraisals kill deals"
A VA appraisal includes Minimum Property Requirements, which is what people mean. The MPRs are about safety, soundness and sanitation — a functioning roof, working mechanicals, no exposed wiring, safe access, no obvious structural problem.
On a tract home built in 1998 in Menifee, this is a non-event. On a 1950s bungalow with deferred maintenance, it can generate repair requirements. That is a property-condition question, not a VA question, and a conventional appraiser flagging the same roof would produce the same negotiation.
If your house is in reasonable repair, a VA appraisal is an appraisal.
"The seller has to pay the veteran's closing costs"
No. The seller has to pay nothing they did not agree to pay in the contract.
There is a category of non-allowable fees a veteran cannot be charged, which the lender absorbs or structures around. That is between the veteran and the lender. It is not an obligation you inherit as a seller.
The VA does permit seller concessions of up to four percent of the home's value — permits, not requires. A conventional buyer can ask for concessions too.
"VA loans take forever"
VA loans close on the same timeline as conventional loans when the lender does VA volume and when the file is complete. A lender who closes two VA loans a year will be slow. A lender who closes them constantly will not.
That is a lender-selection question, and it is worth asking directly: how many VA loans did you close last year? The answer predicts the timeline better than the loan type does.
"The veteran has to put money down" — or the reverse, "it costs them nothing"
Both wrong, in opposite directions.
A VA purchase loan can be made with no down payment. But there is a funding fee, and it is not trivial. The VA publishes the schedule:
| Down payment | First use | Subsequent use |
|---|---|---|
| Less than 5% | 2.15% | 3.3% |
| 5% or more | 1.5% | 1.5% |
| 10% or more | 1.25% | 1.25% |
On a $525,000 purchase with nothing down, first use, that is $11,287.50. It can be financed into the loan — the VA notes that on a purchase "you can finance only the VA funding fee into the loan amount," and everything else is due at closing.
Worth knowing on both sides of the table: 2.15 percent versus 3.3 percent is a real difference for a repeat user, and the step down at five percent down is steep enough that a buyer with some cash should run both scenarios.
"Everybody pays the funding fee"
No, and this is the one that costs veterans the most money when a loan officer does not ask.
The VA exempts a borrower who is receiving VA compensation for a service-connected disability, who is eligible for that compensation but receives retirement or active duty pay instead, who is a surviving spouse receiving Dependency and Indemnity Compensation, who has a proposed or memorandum disability rating before closing, or who is an active duty member with evidence of a Purple Heart by closing.
An exempt borrower on that $525,000 purchase saves the entire $11,287.50.
If you have a rating and you are being quoted a funding fee, stop and ask why. If a rating is pending, tell your loan officer — a memorandum rating before closing can matter.
What this means if you are selling
Evaluate the offer, not the loan type. A VA buyer with a complete file, a lender who closes VA volume, and a house in ordinary condition is not a riskier close than a conventional buyer with a thin pre-approval letter.
If you are declining VA offers on reflex in a market with a reserve base in it, you are shrinking your own buyer pool for no reason.
What this means if you are buying
Two questions for any lender before you commit: how many VA loans did you close last year, and am I exempt from the funding fee? The first sets your timeline. The second can be worth five figures.
Sources
Jeff Maas
Broker-Owner · DRE #00981576 · NMLS #246684
Jeff Maas has been a licensed California real estate professional since 1988 and opened National Realty Group in Riverside in 1991. He is the broker-owner of the brokerage and CEO of National One Mortgage Corp, and he founded Escrow One and America's Best Property Management, giving clients real estate, lending, escrow and property management under one roof. Jeff has closed more than 1,000 transactions for buyers, sellers and investors at every price level, and ranks in the top 5% of producers in Southern California by MLS production. He has won National Realty Group's Eagle Award — given to agents producing more than $250,000 in gross income in a year — three years running, and has earned the 1% Award from United Wholesale Mortgage. He teaches real estate at California Baptist University, serves as CFO for Bethel Christian Schools, and is a member of the California Association of REALTORS® and the National Association of REALTORS®. He works with clients across Riverside, San Bernardino, Orange, Los Angeles and San Diego counties.
More from Jeff →This post is general information, not legal, tax, lending or investment advice, and it is not a guarantee of any result. Market figures are accurate as of the date shown and change. National Realty Group is an Equal Housing Opportunity brokerage.