I have applied for a VA Vendee loan. I am not a Veteran but am taking a repo'd house off the VA's repossessed homes list. This loan product is offered to individuals to help finance the purchase of VA REO Properties. Both veterans and non-veterans are eligible for Vendee financing.
Some of the guidelines are listed below:
Can be financed with as little as 0% down. The loan amount may be increased up to 2% to finance closing costs, pre-paids or other expenses.
Funding fee of 2.25% may not be financed. Seller may contribute up to 6% of the purchase price to pay for the funding fee, closing costs (including the $2500.00 origination fee), prepaid and other expenses.
I'm a first time home buyer trying to figure this out for a home that costs about $60,000.
I can't figure how much cash I need to start with for a $0 down home loan. I seem to understand that equals about $5000.
I cannot finance 2.25% $1350+ plus 6% closing costs of $3600.
Loan may be increased by 2% to finance closing cost -$1200 = $3700 I need for my $0 down?
That was my first question, second is if I get approved for $62,000 does that mean I need to find a house for $62,000 or do I anticipate the 102% of the loan totaling $62,000? So my max bid cannot be more than $60,784?
Well, I have to admit, this kind of loan product is new to me. I did a little quick research at the VA website and you have found a great loan product here.
The best answer I can give you is to look at it this way.
You are looking to buy a VA repossessed home using a loan product that offers very flexible terms in my opinion. So when you consider who the seller is, it is likely you would have no problem getting the 6% sellers concessions which can be used towards most all of the cost involved in doing the loan including your 2.25% funding fee.
Consider the sale price of the home is $60,000. You are going to borrow $61,200 with $1200 going towards your closing cost. You do not need a down payment. Let's say the closing cost charged by the lender is 6% of the sales price which is $60,000. So your closing cost would be $3600.
At closing you would have to pay the $3600, plus the funding fee of $1350. For this we have a total costs of $4950. If we get a 6% seller concession of $3600 and you have the 2% or $1200 from your financing, you should not need more than $150 for closing.
However, the question remains if you can get all the closing cost covered by the this 8% (6% from the seller and the 2% you financed). There are several costs involved, like credit reports, home owner insurance, taxes etc.
I would expect you would need somewhere around $3000 total.