Selling Your Home to a VA Buyer: What to Expect
When your buyer uses a VA loan, expect a VA appraisal that confirms value and checks minimum property standards. Repairs may be required to satisfy safety, sanitation, and habitability rules. Sellers can offer credits and certain concessions, up to 4 percent by policy. Assumptions and entitlement restoration follow specific procedures, so document terms clearly and coordinate early with the lender and title.
Quick Facts
- VA appraisers analyze the sales contract, set reasonable value, and identify any repair conditions tied to MPRs.
- MPRs target safety, sanitation, and structural soundness; a VA appraisal is not the same as a home inspection.
- Seller concessions are capped at 4%; seller-paid allowable closing costs are not part of that cap.
- Sellers can pay a buyer’s VA funding fee as a concession, if documented on the contract and closing disclosure.
- VA loans are assumable with lender/VA approval; entitlement may remain encumbered without a substitution.
Mini FAQ
Do VA appraisals “fail” homes more often?
VA appraisals determine reasonable value and check minimum property requirements; they do not “fail” homes arbitrarily. If issues appear, the report lists conditions to be met—often focused on health, safety, or soundness. Addressing repairs early usually keeps the timeline on track while satisfying underwriting and guaranty standards.
How much can sellers contribute under VA rules?
VA limits seller concessions to 4 percent of reasonable value, but does not limit credits for a buyer’s allowable closing costs. The distinction matters: paying a funding fee or buydown beyond normal costs is a concession; paying standard fees is a closing-cost credit, which is outside the 4 percent cap.
Are VA loans assumable—and what about my entitlement?
Yes. VA loans are assumable with approval and proper processing. If an assumption occurs without a substitution of entitlement, the seller’s entitlement remains tied to the loan until it is paid in full. Release from liability and restoration of entitlement require specific forms and documentation after closing.
- VA appraisals confirm value and flag safety, sanitation, and habitability items under MPRs.
- Seller concessions are capped at four percent; allowable closing-cost credits are uncapped.
- Funding-fee payments by sellers count as concessions and must be contractually documented.
- Pre-listing MPR prep minimizes surprises and keeps appraisal conditions manageable.
- Assumptions need approval; entitlement can remain tied without substitution and release.
- Clear credits, timelines, and repair scopes prevent rework and late-stage closing delays.
What should sellers expect when a buyer uses a VA loan?
Expect the same core steps as other mortgages, plus VA-specific quality checks. A VA-assigned appraiser determines reasonable value and confirms the property meets Minimum Property Requirements (MPRs) before guaranty. Sellers may be asked to complete focused repairs. Credits and concessions must be disclosed in the sales contract because the appraiser analyzes contract terms when forming the value opinion (VA Lender’s Handbook Ch. 10; Ch. 12).
- The VA appraisal adds a safeguard rather than a hurdle, focusing on obvious health, safety, and soundness issues. Sellers who review common MPR touchpoints in advance usually avoid last-minute conditions that pressure timelines and increase the risk of costly extensions or re-inspections.
- Because the appraiser reviews the fully executed contract, spell out every credit, concession, buydown, and repair agreement. Clear documentation prevents valuation confusion and helps the lender classify funds correctly, keeping the closing disclosure accurate and compliant for guaranty issuance.
- VA allows seller help in two categories: allowable closing-cost credits (uncapped by VA) and “seller concessions” (capped at 4 percent of reasonable value). Understanding this distinction early lets you structure support that maximizes buyer affordability while staying within policy.
How does the VA appraisal and MPR process work?
VA assigns a fee appraiser to analyze your buyer’s contract, inspect the property, and estimate reasonable value. The appraiser also indicates any repairs needed to satisfy MPRs. MPRs protect Veterans and lenders by ensuring a safe, sanitary, structurally sound home. Remember: a VA appraisal is not a comprehensive home inspection (Ch. 10; Ch. 12).
- Common MPR themes include adequate heating, safe electrical service, functional plumbing, sound roofing, and free egress. Appraisers flag readily apparent concerns; lenders then require completion of listed items so the final loan complies with guaranty rules and protects the buyer’s long-term habitability.
- If value supports the contract and any listed repairs are resolved, the lender issues the Notice of Value and clears appraisal conditions. Early coordination on access, utilities, and documentation helps avoid re-inspections and keeps underwriting aligned with contract deadlines and earnest-money timelines.
- Sellers benefit from a quick MPR check before listing—especially roof, water intrusion, utilities, and handrails. Small fixes made early are usually cheaper than critical repairs under deadline, and they signal to appraisers and buyers that the home has been responsibly maintained.
| Common MPR Checkpoint | What the VA Appraiser Looks For | Seller Prep Tip |
|---|---|---|
| Roof & structure | Sound roofing with no active leaks or obvious failure; safe, stable structural components supporting normal use. | Replace missing shingles, seal penetrations, and address active leaks; document any recent repairs with invoices and photos to streamline review. |
| Heating system | Permanent heat adequate for the property’s living areas and climate; safe operation without hazardous conditions or fuel leaks. | Service the unit, replace filters, and verify each room is heated; leave service tags and receipts where the appraiser can see them easily. |
| Electrical & safety | Functional service, intact covers, no exposed wiring, and working fixtures in livable areas; safe access to panels. | Install missing cover plates, secure loose fixtures, and clear access to the panel; label breakers if practical for easier verification. |
| Plumbing & water | Running water, no active leaks at visible lines or fixtures, and functional hot water; sanitary waste disposal. | Repair drips, caulk surrounds, and test all fixtures; have receipts for recent plumbing work to satisfy any documentation requests quickly. |
| Access & egress | Safe entry and exit, operable windows as required for sleeping areas, and secure handrails where needed. | Add handrails on stairs, replace broken panes, and ensure windows open freely; clear obstructions from walkways and entries. |
Which repairs are commonly required—and who pays?
Repairs are typically limited to items needed for value support and MPR compliance. Parties can negotiate who pays, but completion must be documented before guaranty. Pre-listing fixes and clear scopes keep the process smooth. Because the appraiser revisits only when necessary, complete repairs thoroughly the first time for quicker clearance (Ch. 12).
- Expect small safety items—loose handrails, missing GFCIs, broken glazing, trip hazards—to appear more often than large structural mandates. Addressing minor issues up front reduces the chance of a re-inspection that squeezes contract timelines and increases stress for both parties.
- When a larger repair emerges, request a written scope, photos, and completion receipts. Organized documentation lets the lender clear conditions without additional questions, helping you avoid last-minute delays or confusion about whether an item meets the appraiser’s stated intent.
- “As-is” listings can work if the home already meets MPRs. If it does not, someone must complete repairs to close with VA financing. Clarify responsibility in addenda so appraisal conditions, re-inspections, and credits are aligned with your actual plan to finish work.
What seller concessions are allowed under VA rules?
VA distinguishes between uncapped credits for allowable closing costs and capped “seller concessions” limited to 4 percent of reasonable value. Concessions include items beyond typical closing costs—such as paying the funding fee, providing buydowns, or paying consumer debt for qualification. Know the difference to structure compliant, helpful support (Funding Fee & Closing Costs; Handbook Ch. 8).
- Paying allowable closing costs (e.g., title, recording, standard lender fees) is not counted toward the 4 percent concession cap under VA policy. These credits remain uncapped by VA, though they must still fit investor and program documentation rules at closing.
- Concessions are capped at 4 percent and include paying the funding fee, providing temporary interest rate buydowns, or paying the buyer’s consumer debt. Keep an itemized contract so the lender can classify amounts correctly when preparing the closing disclosure.
- Discount points “appropriate to the market” are not concessions, per the Handbook’s example. Excess points above market norms may be treated as concessions; align with the lender’s pricing evidence to avoid misclassification that could breach the 4 percent limit.
Can the seller pay the buyer’s VA funding fee or closing costs?
Yes, within policy. A seller can pay allowable closing costs without a VA cap, and may also pay the buyer’s funding fee as a concession within the 4 percent limit. Because the appraiser analyzes the contract, itemize all credits so valuation and classification are clear (VA costs page; Ch. 10).
- Show closing-cost credits and concessions on separate lines in the contract or addenda. This prevents the total from being treated solely as a concession and preserves room under the 4 percent cap for funding-fee coverage or buydowns that improve affordability.
- Confirm whether lender credits or pricing reflect a trade-off with discount points. If you intend to contribute points, ask the lender to document market appropriateness so the amount is not miscounted as a concession in the 4 percent calculation at closing.
- Keep receipts and final invoices. Clear documentation lets the lender and title company prepare accurate closing disclosures and reduces post-closing questions that can delay guaranty issuance or create reconciliation requests after funding.
Are VA loans assumable—and what happens to my entitlement?
VA loans are assumable, subject to credit and approval. If an assumption occurs without a substitution of entitlement, your entitlement remains tied to the loan until it is paid in full. Release from liability and restoration require specific forms and lender/VA processing after the transfer (Circular 26-23-10; VA Form 26-6381).
- Assumption types include those with or without substitution of entitlement. Without substitution, your previously used entitlement stays encumbered by the assumed loan, limiting future use. With substitution (and approval), your entitlement can be freed for another VA-backed purchase later.
- The seller and buyer submit an assumption application and full credit package, similar to a purchase file. The holder or servicer underwrites, and VA policy requires processing assumptions according to published circulars and stacking-order guidance for records.
- To pursue release from liability, use VA Form 26-6381. For entitlement restoration after payoff or disposition, review eligibility guidance and, if necessary, request restoration through your lender or by filing VA Form 26-1880 with supporting documentation.
What should you expect at closing and after the sale?
Closing mirrors other transactions: buyer signs loan documents, funds are disbursed, and your existing lien is paid off. If your prior mortgage was VA-backed, payoff clears that debt. To reuse full entitlement later, confirm eligibility for restoration after payoff and property disposition or follow one-time restoration rules (VA eligibility & restoration).
- Your payoff appears on the closing disclosure, and title records the transfer. Save the final, signed settlement statement and payoff letter; these documents simplify future entitlement requests and help verify that prior liens have been fully satisfied and released of record.
- For restoration, the Veteran or lender may request updates through VA systems or by submitting the appropriate forms. Restoration paths vary depending on whether the property was sold, retained, or assumed with a substitution of entitlement completed and recorded.
- If a buyer assumes your loan, confirm whether a release from liability and substitution were granted. Without them, your entitlement may remain tied to that balance, reducing what you can use on a future VA-backed purchase until the assumed loan is paid off.
How should sellers document concessions and credits?
Because appraisers analyze the contract, write clear, line-itemed terms. Identify each credit and whether it is a closing-cost credit or a concession, and specify any funding-fee payments or buydowns. This clarity avoids valuation ambiguity and helps the lender build an accurate, compliant closing disclosure (Ch. 10).
- Use addenda to list each item separately: title/recording credits, discount points, funding-fee coverage, temporary buydowns, and any agreed repairs. Separate classification allows the lender to keep concessions within the 4 percent cap while maximizing permitted closing-cost support.
- Attach invoices or estimates when they exist. The more precisely you describe buydown costs, points, and fees, the easier it is for underwriting and closing to cross-reference numbers and avoid last-minute re-disclosures or miscounts that could delay funding and recording.
- Ensure both parties initial any changes to concessions mid-process. Untracked updates can confuse the appraiser and title company, forcing re-work and risk of errors on the final disclosure that affect prorations, escrow set-ups, or the final buyer cash-to-close amount.
What’s a practical pre-listing MPR checklist for sellers?
Walk your property like an appraiser: look for health/safety items and obvious maintenance issues. Test fixtures, check railings and detectors, and address moisture or damage. Keep receipts for recent work. This dry run reduces surprises, keeps conditions short, and helps the loan move from Notice of Value to clear-to-close efficiently (Ch. 12).
- Confirm continuous heat in living areas, grounded outlets near water, clear egress, intact glazing, working smoke/CO detectors, and dry attics/crawlspaces. These basic checks often prevent the most common conditions and avoid re-inspection fees under tight purchase timelines.
- Service major systems proactively and keep documentation where it’s easy to find. Visible proof of recent maintenance supports the appraiser’s observations and gives underwriters confidence that systems meet normal expectations for safe, functional operation in your local climate.
- Address obvious trip hazards, missing handrails, and minor leaks in advance. Small corrections made before listing typically cost less than urgent repairs after appraisal, protecting your net proceeds while keeping buyer confidence and lender timelines intact.
VA seller FAQs
Can I sell “as-is” to a VA buyer?
Yes, but if MPR issues exist, someone must complete repairs before closing. If you want to avoid doing repairs yourself, structure credits and timelines carefully and ensure the buyer and lender agree that repairs will be done in time to meet underwriting and guaranty requirements.
Do VA appraisals always add time?
Timelines vary by market and complexity. The appraisal adds a defined step focused on value and MPRs. Sellers who prepare for common MPR items and provide access, utilities, and repair documentation typically see timelines similar to other loans with no surprises late in underwriting.
What happens if the appraisal value is below the contract price?
Parties can renegotiate, the buyer can request a reconsideration of value through the lender, or the buyer may contribute cash. The VA amendatory clause allows a buyer to cancel without penalty if value falls short and no resolution is reached on price or credits.
Can I pay the buyer’s funding fee?
Yes. Paying a buyer’s funding fee is permitted as a seller concession and counts toward the 4 percent concession limit. Your contract and closing disclosure must reflect the payment clearly so the lender can document compliance and guaranty eligibility under VA policy.
Are discount points treated as concessions?
Not when they are appropriate to the market. The VA Handbook’s example distinguishes market-appropriate points from excessive points, which could be treated as concessions. Coordinate with the lender so points align with pricing evidence and do not inadvertently consume concession capacity.
Can buyers assume my existing VA loan?
Yes, with approval and full underwriting of the assuming party. Without a substitution of entitlement and release from liability, your entitlement may remain tied to the assumed balance until it is paid off. Ask the holder about the forms and fees for a compliant assumption.
How do I restore my VA entitlement after selling?
After payoff and disposition, you or your lender can request restoration through VA systems or by filing VA Form 26-1880. If you keep the property after payoff, a one-time restoration path may be available. Review VA’s eligibility page or contact your Regional Loan Center for guidance.
Do I need a separate home inspection?
A VA appraisal is not a home inspection. Many sellers order a pre-listing inspection to spot issues early and price accordingly. While not required by VA, proactive maintenance and documentation reduce friction, build buyer confidence, and help appraisal and underwriting finish efficiently.
Citations Used
- VA Lender’s Handbook — Chapter 10: Appraisal process; appraiser access to and analysis of sales contracts, and effect on value and conditions. PDF
- VA Lender’s Handbook — Chapter 12: Minimum Property Requirements; appraisal is not a home inspection; properties must meet MPRs prior to guaranty. PDF
- VA Lender’s Handbook — Chapter 8: Borrower fees, closing costs, and seller concessions; points appropriate to the market. PDF
- VA — Funding Fee & Closing Costs: no VA limit on closing-cost credits; 4% cap on seller concessions; guidance on reasonable value. Web
- VA Circular 26-23-10: Assumption processing; assumption with or without substitution of entitlement; release of liability concepts. PDF
- About VA Form 26-6381: Application for assumption approval and/or release from personal liability to the Government on a home loan. Web
- VA — Eligibility & Restoration: how to reuse entitlement after payoff/disposition; restoration processes and forms. Web
The Bottom Line
Selling to a VA buyer is straightforward when you understand three levers: the appraisal (value and MPRs), how credits are classified (uncapped closing-cost credits versus concessions capped at 4 percent), and how assumptions or payoff affect entitlement. Prepare for MPRs with a pre-listing check, itemize support clearly in the contract, and keep repair documentation handy. If an assumption is on the table, confirm approval steps, release from liability, and any substitution of entitlement early so your next purchase plans stay fully intact.
Levi Rodgers is the Founder of VA Loan Network, a leading resource for Veteran homebuyer education. A Retired Green Beret and Broker-Owner of LRG Realty in San Antonio, Levi leverages his military discipline and real-world real estate expertise to provide Veterans with expert loan advice, guidance, and trusted financial leadership.
