I hate VA loans, except when higher income debt ratios are needed or when the purchaser has credit issues that make getting approved conventionally less likely.

Can anyone out there give me better reasons to encourage a purchaser to use his VA eligibility for the 1^st or even worse, the 2^nd time? 

For folks that haven’t had the experience of being in the middle of a VA deal, here are a few things to keep in mind:

• If you have a purchaser with a lot of debt, but they are insisting they will buy a home with or without you, I have seen some VA loans go through where the Purchaser’s overall debt ratio was between 50% and 55%. 

• If your Purchaser has late payments and even more serious credit dings, chances are, with certain compensating factors and explanations, the loan may well still be approved

• As I recall, the 1^st time a Veteran uses his/her eligibility, a Funding Fee is assessed by VA. 2% of the sales price is added to the loan amount. The 2^nd and any additional times the eligibility is used, 3% of the sales price is added. On a $300,000 purchase, that would be a loan amount of $309,000! In a slow market, I hope the Veteran won’t have to sell any time soon. 

• Most seasoned listing agents (myself included), flinch when we see a VA offer on the table. I have seen sellers on multiple occasions accept a lower price conventional loan offer rather than go with a higher-priced offer that has a  VA loan

• VA appraisers are independently assigned by the Veterans Administration and, as a matter of general practice, tend to be very conservative. I believe they say “protecting the Veteran’s interest”. 

• In my experience, if any appraisal is going to come in low, it’s a VA appraisal. They place less weight on what the willing buyer and willing seller agreed to than do conventional appraisers. Since they believe themselves to be autonomous, they are less willing to accept/consider listing agent provided comp info, rarely call you if there is a value issue and, generally, don’t care if the deal falls out due to his assessment of the property.

• Finally, after sweating major bullets over the appraisal value, there is a possibility you may also have to deal with a list of required repairs that must be completed prior to closing. Some or all of the repairs may well have come up in the home inspection and, the appraiser can throw your agreement right out the window with the required repairs being a closing condition for which he will need to come back again to confirm the work was finished. This can range from something as simple as painting trim to very expensive items like replacing a roof. 

So if you are writing offer for one of my listings, save us both some time, don’t come in with VA financing.

Anyone have a different point of view? Similar experiences? Better recommendations?