Ever heard of a VA bonus entitlement loan? Me either until recently. I have to say I am still quite confused on the matter. Here is the situation: I represented the seller
Military home buyer brings contract with a VA financing addendum for a contract price of $130,000. 2 weeks into transaction, prior to appraisal, we get a request to raise the purchase price to $144,000 due to buyers inability to get a conventional VA loan. Instead he had to get a VA bonus entitlement loan based on his 'VA status' being linked to another property......here's where they start to lose me. Because of other property, the minimum loan amount available to them is $144k, so they want to raise the offer price and use excess funds toward renovation costs that they were going to do immediately upon purchase. The home did not appraise for $144k and the deal fell apart. The buyers were unwilling to persue another alternative but VA because they wanted 100% financing....and we all know that is not prevalent among conventional lending right now.
Can anyone explain to me how the VA comes up with minimum loan amts on these bonus entitlement programs?
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