VA Vendee Loan: What It Is and How It Works

Written by Kim PinnelliUpdated: 29th Mar 2022
Share this article

Disclaimer: This post contains references to products from one or more of our advertisers. We may receive compensation (at no cost to you) when you click on links to those products. Read our Disclaimer Policy for more information.

Did you know you could be eligible for a VA home loan without being a veteran? The VA Vendee Loan program is a chance for any borrower to secure VA financing, but only on certain homes. It can be a great program for someone looking for an undervalued home or who wants to get into real estate investing.

Here’s everything you must know about the VA Vendee Loan program and how it works.

What is a VA Vendee Loan?

The VA Vendee loan is a program the VA runs to sell VA REO properties, otherwise known as foreclosed properties the VA took possession of for nonpayment. Because the VA guarantees loans for lenders, they keep the property and try to sell it to earn their money back.

>> More: Best VA Loan Lenders

How Does the VA Vendee Loan Program Work?

The VA Vendee program isn’t just for veterans, unlike standard VA loans. Any qualified buyer can buy a VA REO property and use VA financing. While the VA would prefer all-cash buyers, they offer this program to make it easier for homebuyers.

Like the standard VA loan, borrowers can secure the loan with no money down and enjoy competitive interest rates.

VA Loan Foreclosure Process

The VA has many options for homeowners to help them avoid foreclosure, but it’s always an option. If the lender must foreclose, it’s usually after the borrower misses at least 90 days of payments. This is when the lender sends notices to the borrowers and the courts.

Borrowers usually have another 90 days to make up the late payments or take advantage of one of the VA’s programs. If they don’t, the foreclosure process will continue.

The lender forecloses on the property, but then the VA buys the property off the lender to honor the guarantee they offered at the start of the loan.

Who Is Eligible for a VA Vendee Loan? Eligibility Requirements

Unlike standard VA loans, where the only eligible borrowers are current military members or veterans, anyone can qualify for the VA Vendee loan. To qualify, you must meet the credit score requirements of the program (they aren’t high) and the debt-ratio requirements.

In other words, you must prove you have a good track record of paying your bills and that you aren’t in over your head in debt. You don’t have to buy the home as your primary residence, unlike the standard VA loan. You can buy the home to live in or rent out – there aren’t any stipulations.

>> More: What Is the VA Loan Certificate of Eligibility?

Pros and Cons of VA Vendee Loans

Pros:

  • Flexible underwriting guidelines, including no minimum credit score requirement per the VA
  • Anyone can use the program; it’s not just for veterans
  • You don’t need a down payment or at least a large one
  • There is no mortgage insurance

Cons:

  • All borrowers pay a funding fee to the VA as part of the closing costs
  • It might be difficult to find available homes
  • You must have the cash to cover your closing costs

Who Should Use a Vendee Loan?

The best candidates for the Vendee loan are real estate investors. If you’re always in the market looking for the next ‘great buy,’ the VA Vendee program can be your best bet. You’ll buy foreclosed properties at a fraction of their value and get attractive financing options on an investment property.

Keep in mind, you won’t find them in every area, and even when you do find one, it can be like a diamond in the rough, so keep your eyes open, but don’t rely on them.

Is It Safe to Use a Vendee Loan?

The VA loan program is as safe as any other loan program. It has the VA’s backing, so there’s nothing to be worried about, but you must have enough money to cover the closing costs, including the VA funding fee.

You can’t roll your closing costs into the loan, but it can be a great way to get the home you want without the need for a down payment.

Bottom Line: VA Vendee Loan Program

Anyone can use the VA Vendee Lona program if they qualify. Like any loan, you must prove you have the credit score and debt ratio to make the monthly mortgage payments, especially if you buy an investment property.

The VA Vendee Loan could be your way into the VA loan program without being a veteran. See if it would work in your area and start your venture into real estate investing today!

Keep Reading:

Kim Pinnelli
Kim Pinnelli

Kim Pinnelli is a Senior Writer, Editor, & Product Analyst with a Bachelor’s Degree in Finance from the University of Illinois at Chicago. She has been a professional financial writer for over 15 years, and has appeared in a myriad of industry leading financial media outlets. Leveraging her personal experience, Kim is committed to helping people take charge of their personal finances and make simple financial decisions.