VA REO Properties and Vendee Seller Financing
VA Vendee Financing: How to Buy VA-Owned REO Properties in 2026
Vendee financing is seller financing from the VA, a direct loan for purchasing Vendee-eligible VA-owned REO properties. Military service is not required, and the loan does not use VA entitlement. The funding fee is 2.25 percent. An origination fee of up to 1.5 percent may be charged. Not every VA REO qualifies. VRM Mortgage Services administers the program.
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What Vendee Is
- Seller financing from the VA. The VA makes a direct loan to the purchaser to finance the sale of property the VA acquired through foreclosure. [VA fact sheet] · 38 CFR 36.4501
- Military service not required. The program is available to Veterans, non-Veterans, owner-occupants, and investors. [VA fact sheet]
- Does not use VA entitlement. A Vendee purchase does not reduce the borrower's VA loan guaranty entitlement. [38 USC 3733]
Property Eligibility
- VA-owned REO only. Only properties the VA acquired through defaulted VA-guaranteed loans are eligible for Vendee financing. [38 USC 3733(a)(1)]
- Not all VA REOs qualify. VRM's listing filter identifies properties that may qualify for seller financing. [VRM program guidance]
- Listed through local MLS and VRM. Properties are listed by local listing agents through the local MLS and viewable on VRM's portal. [VA.gov property mgmt]
Financing and Fees
- Little to no money down. The VA fact sheet describes financing with little to no money down for qualified borrowers. [VA fact sheet]
- Funding fee: 2.25 percent. A flat rate under 38 USC 3729, regardless of down payment or use count. [38 USC 3729(b)(2)(J)]
- Origination fee up to 1.5 percent. Both the origination fee and funding fee may be rolled into the loan. [38 CFR 36.4528] · [VA fact sheet]
Investor Rules
- Investment purchases allowed. The VA fact sheet lists investors alongside owner-occupants as eligible purchasers. [VA fact sheet]
- LTV cap and exception. The cap in 38 USC 3733(a)(4)(A) is 95 percent of the purchase price; (B)(ii) lets the Secretary exceed it to market the property competitively. [38 USC 3733(a)(4)]
- Entitlement preserved. Vendee does not consume VA entitlement. A Veteran investor retains full entitlement for a separate VA purchase loan. [38 USC 3733]
Top questions before you dig in
Do I need to be a Veteran to use Vendee financing?
Can I buy a Vendee property in an LLC?
Can Vendee financing cover the repairs?
The Bottom Line Up Front
Vendee financing is a direct loan from the VA for purchasing VA-owned REO properties. Military service is not required. The funding fee is 2.25 percent under 38 USC 3729, and an origination fee of up to 1.5 percent may be charged under 38 CFR 36.4528. Both fees can be rolled into the loan.
The VA acquires properties through defaulted VA-guaranteed loans and lists them for sale through local real estate agents via the MLS and through VRM Mortgage Services, the VA’s contracted property management administrator. The VA fact sheet describes Vendee financing as “a unique seller financing loan product that is competitive and affordable,” with “little to no money down” for qualified borrowers. The statute permits the Secretary to include rehabilitation costs to a habitable state, though the VA fact sheet and VRM’s pages describe no rehabilitation component; confirm with the listing’s financing contact before counting on it.
How Vendee Financing Differs From a Standard VA Purchase Loan
A standard VA purchase loan is a guaranty: a private lender makes the loan, and the VA guarantees a portion against default. Vendee financing is the reverse: the VA itself makes the loan directly to the buyer. Almost everything else follows from that difference.
| Feature | Standard VA purchase | Vendee |
|---|---|---|
| Loan structure | VA guarantees a private lender’s loan | VA makes the loan directly (seller financing) |
| Veteran status required | Yes | No |
| COE and entitlement required | Yes | No |
| Eligible property | Any property meeting MPR | VA-owned REO properties only |
| Occupancy | Primary residence | Owner-occupant or investor |
| Owner-occupant down payment | $0 with full entitlement | Little to no money down per VA fact sheet |
| Investor financing | Not permitted | Permitted; statutory 95% LTV default, VRM Lending describes “little to no money down” for investors |
| Standard VA appraisal | Required | No appraisal requirement per VA fact sheet; VRM notes appraisal may be required |
| MPR process | Required | Sold as-is |
| Repairs financed | VA renovation loan (separate program) | Statute permits rehab to habitable state; VA fact sheet and VRM describe no rehab component; confirm before counting on it |
| Monthly mortgage insurance | None | None |
| Funding fee | 2.15% first use / 3.30% subsequent (no down) | 2.25% flat |
| Origination fee | Up to 1% (lender flat charge) | Up to 1.5% |
| Loan term | Up to 30 years | 15 or 30 years |
| Rate | Market rate agreed with lender | Set by the Secretary; statute directs a rate lower than prevailing market when needed for competitive marketing |
| Entitlement used | Yes | No |
| Prepayment penalty | None | None |
Does This VA REO Qualify for Vendee Financing?
Not every VA-owned property qualifies for Vendee financing. VRM’s listing filter identifies properties that may qualify for seller financing.
- Check the VRM listing. Properties eligible for Vendee financing are identified on VRM’s portal. If the listing does not indicate Vendee eligibility, the property may require cash or conventional financing. [VRM program guidance]
- VRM administers property-level eligibility. The specific criteria the VA and VRM use to determine whether a VA REO qualifies for Vendee financing are governed by VRM’s program guidelines. [VRM program guidance]
Where VA-Owned Homes Are Listed
The VA lists acquired properties through two channels.
- Local real estate agents through the MLS. VA-owned properties are listed by local listing agents through the local Multiple Listing Service. Any licensed agent can show the property and submit an offer through VRM’s system. [VA.gov property mgmt]
- VRM Properties portal. Properties may also be viewed on VRM Properties, the VA’s contracted central portal. Use the property search to filter by state and financing type. [VA.gov property mgmt]
- VRM phone. Call 855-843-8334 for assistance or email info@vrmco.com. [VA fact sheet]
Who Can Qualify
Vendee financing is open to a broader pool of purchasers than a standard VA loan.
- No Military service required. The VA fact sheet states the program is available to “Veterans, non-Veterans, owner-occupants, and investors.” [VA fact sheet]
- No COE needed. Because Vendee is a direct loan from the VA, not a guaranty, it does not require a Certificate of Eligibility. [38 USC 3733]
- Credit underwriting standard applies. Under 38 USC 3733(b), the purchaser must meet the credit underwriting standards established under section 3710(g)(2)(A). [38 USC 3733(b)]
- Veteran documentation matters only for the funding fee waiver. A Veteran or surviving spouse seeking a funding fee exemption must provide documentation of qualifying status. The exemption does not affect loan qualification. [38 USC 3729(c), VA.gov]
Owner-Occupant Versus Investor Financing
The VA fact sheet describes “financing with little to no money down” for qualified borrowers and lists both owner-occupants and investors as eligible purchasers. Under 38 USC 3733(a)(4)(A), a Vendee loan may not exceed 95 percent of the purchase price, but subparagraph (B)(ii) allows the Secretary to exceed that cap when necessary to market the property competitively. The VA fact sheet’s “little to no money down” reflects this authority.
- Owner-occupant terms. The VA fact sheet describes “little to no money down.” VRM Lending’s Vendee page describes “little to no money down for owner-occupant borrowers and investors” and states that gift funds are accepted for owner-occupant primary homes. The statute allows the Secretary to exceed the 95 percent LTV cap for competitive marketing, which supports zero-down terms. [VA fact sheet] · [VRM program guidance, vrmlending.com/va-vendee-loan/] · [38 USC 3733(a)(4)(B)(ii)]
- Investor terms. VRM Lending describes “little to no money down for owner-occupant borrowers and investors.” The default statutory LTV cap is 95 percent under 38 USC 3733(a)(4)(A); (B)(ii) lets the Secretary exceed it for competitive marketing. VRM’s program may set different terms for investors. [VRM program guidance, vrmlending.com/va-vendee-loan/] · [38 USC 3733(a)(4)]
- Closing costs are separate. The VA fact sheet notes that the seller may contribute toward closing costs. The origination fee and funding fee may be financed into the loan, but other closing costs are addressed separately. [VA fact sheet] · [38 CFR 36.4528(b)]
Appraisal and Property Condition
The VA fact sheet states “No appraisal requirement.” VRM’s program page notes that an appraisal “may be required.” These are not contradictory: the VA does not impose the standard VA appraisal and MPR process used in guaranteed loans, but VRM may require an appraisal in certain circumstances.
- No standard VA appraisal. Unlike a VA-guaranteed purchase loan, Vendee financing does not require a VA appraisal or MPR compliance. [VA fact sheet]
- VRM may require an appraisal. VRM’s program page states an appraisal may be required in certain transactions. [VRM program guidance]
- Commonly sold as-is. VRM listings are commonly sold without repairs or warranties from the VA. Read each listing for its specific terms. The buyer assumes property condition risk at closing. [Practical step]
- Inspection is the buyer’s responsibility. Order a private inspection during the inspection period to identify what work the property needs and estimate costs. The VA does not make repairs and does not negotiate based on inspection findings. [Practical step]
Can Vendee Finance Repairs?
The statute permits the Secretary to include rehabilitation costs to a habitable state. The VA fact sheet and VRM’s pages describe no rehabilitation component. Confirm with the listing’s financing contact before counting on it.
- Rehab to habitable state. The statute limits financed rehabilitation to the amount necessary to reach habitability. Costs beyond that threshold are the buyer’s responsibility. [38 USC 3733(a)(5)]
- Periodic disbursement. Rehabilitation payments are made available periodically as work is completed, not as a lump sum at closing. [38 USC 3733(a)(5)]
- Inspection planning. Get contractor estimates for roof, HVAC, electrical, plumbing, foundation, windows, and other systems during the inspection period to determine whether repair costs fit within the statutory rehabilitation provision or require separate funding. [Practical step]
Fees and Costs
Vendee financing carries two lending fees, both of which may be financed into the loan. Other closing costs are paid separately.
| Vendee cost | Treatment |
|---|---|
| Funding fee | 2.25 percent of the loan amount. Flat rate under 38 USC 3729. May be financed into the loan. |
| Origination fee | Up to 1.5 percent of the loan amount. May be paid in cash at closing or financed into the loan. |
| Mortgage insurance | None. |
| Prepayment penalty | None. |
| Other closing costs | The VA fact sheet states the “seller may contribute toward closing costs.” Specific closing cost items are governed by VRM’s program terms. |
Funding Fee Exemptions
The Vendee funding fee is 2.25 percent. Certain Veterans and surviving spouses may be exempt. The exemption categories, from 38 USC 3729(c) and VA.gov, are status-based, not percentage-based:
- Receiving VA compensation for a service-connected disability. Any compensable rating qualifies. There is no “10 percent or higher” threshold in the statute. [38 USC 3729(c)] · [VA.gov]
- Eligible for VA compensation but receiving retirement or active-duty pay instead. [VA.gov]
- Receiving Dependency and Indemnity Compensation (DIC) as the surviving spouse of a Veteran who died from a service-connected disability. [VA.gov]
- Service member with a proposed or memorandum rating before the loan closing date. [VA.gov]
- Active-duty member who provides evidence of a Purple Heart on or before closing. [38 USC 3729(c)] · [VA.gov]
The VA also notes: “You may be eligible for a refund of the VA funding fee if you’re later awarded VA compensation for a service-connected disability. The effective date of your VA compensation must be retroactive to before the date of your loan closing.”
Rate and Term
The VA fact sheet describes a “competitive interest rate.” The statute directs the Secretary to set the rate “at an interest rate that is lower than the prevailing mortgage market interest rate” when necessary for competitive marketing. The rate is fixed. Loan terms are 15 or 30 years.
Entitlement
Vendee financing does not consume VA loan guaranty entitlement. A borrower who is also a Veteran can purchase a VA REO with Vendee financing and still qualify for a separate VA purchase loan using full entitlement, subject to independent qualification on service, occupancy, income, and debts.
The Offer and Purchase Process
Buying a VA REO through Vendee financing runs through VRM, and the process differs from a standard home purchase.
- Find a property. Search VRM Properties or work with a local real estate agent who can access VA REO listings through the MLS. [VA.gov property mgmt]
- Pre-qualification is optional. VRM describes pre-qualification as a “verbal discussion with loan officer about income and debts” and lists it as the first step, but it is not required to submit an offer. [VRM program guidance]
- Submit an offer. Your real estate agent submits the offer through VRM’s system. The VA reviews and may accept, counter, or reject. [Practical step]
- Inspection. Order a private inspection immediately after acceptance. The property is sold as-is. The inspection determines what work the property needs and estimates costs. [Practical step]
- Financing and closing. VRM coordinates the Vendee loan process, including credit review, documentation, and closing. [VRM program guidance]
Worked Owner-Occupant Example
A Vendee-eligible VA REO is listed at $250,000. The buyer is an owner-occupant with $0 down, permitted under 38 USC 3733(a)(4)(B)(ii), which allows the Secretary to exceed the 95 percent LTV cap for competitive marketing. The fees, computed on the $250,000 base loan:
- Base loan: $250,000.00
- Funding fee (2.25% of $250,000): $5,625.00
- Origination fee (1.5% maximum of $250,000): $3,750.00
- Total financed (if both fees rolled in): $259,375.00
- Monthly escrow items (planned separately): property taxes, homeowners insurance, flood insurance if applicable
The fee percentages are computed on the base loan amount, not on the total financed amount. The VA fact sheet states the “seller may contribute toward closing costs.”
Worked Investor Example
Same $250,000 listing. The statutory default under 38 USC 3733(a)(4)(A) caps the loan at 95 percent of the price; VRM Lending describes “little to no money down for owner-occupant borrowers and investors.” This example uses 5 percent down.
- Purchase price: $250,000.00
- Down payment (5%): $12,500.00
- Base loan: $237,500.00
- Funding fee (2.25% of $237,500): $5,343.75
- Origination fee (1.5% maximum of $237,500): $3,562.50
- Total financed (if both fees rolled in): $246,406.25
- Monthly escrow items (planned separately): property taxes, insurance, flood insurance if applicable
The investor example uses the default statutory 5 percent floor. The Secretary’s (B)(ii) authority and VRM’s program terms may result in different investor down-payment requirements.
Frequently Asked Questions
Do I have to be a Veteran to use Vendee financing?
No. The VA fact sheet states the program is available to “Veterans, non-Veterans, owner-occupants, and investors.” A Certificate of Eligibility is not required.
Does Vendee financing use my VA entitlement?
No. Vendee is a direct loan from the VA, not a guaranty. It does not consume entitlement. A Veteran can purchase a VA REO with Vendee financing and still use full entitlement for a separate VA purchase loan.
Can I buy a VA REO as an investment property?
Yes. The VA fact sheet lists investors as eligible purchasers. Under 38 USC 3733(a)(4)(A), a Vendee loan may not exceed 95 percent of the purchase price, though the Secretary may exceed that cap under (B)(ii) for competitive marketing.
Will the VA make repairs on a Vendee property?
No. VA REO properties are sold as-is. The VA does not make repairs, provide warranties, or negotiate based on inspection findings. All property condition risk transfers to the buyer at closing.
Where do I find VA REO properties for sale?
VA-owned properties are listed by local listing agents through the local MLS and viewable on VRM Properties. Call 855-843-8334 or contact a local real estate agent.
What is the funding fee, and who is exempt?
The Vendee funding fee is 2.25 percent, a flat rate under 38 USC 3729 regardless of down payment or use count. Exemptions apply to Veterans receiving VA compensation for a service-connected disability (any compensable rating), surviving spouses receiving DIC, those eligible for VA compensation but receiving retirement or active-duty pay, service members with a proposed or memorandum rating before closing, and active-duty Purple Heart recipients.
Is an appraisal required?
The VA fact sheet states “No appraisal requirement.” VRM’s program page notes that an appraisal “may be required” in certain transactions. Unlike a standard VA purchase, Vendee does not impose the VA appraisal or MPR process.
Can the Vendee loan include rehabilitation costs?
The statute permits the Secretary to include rehabilitation costs to a habitable state. The VA fact sheet and VRM’s pages describe no rehabilitation component. Confirm with the listing’s financing contact before counting on it.
How We Researched This Page
Every fact on this page traces to a primary source fetched and read during the research session. We did not find VRM’s investor rules, entity and title rules, 1031 policy, or property eligibility categories on its public pages as of September 2026.
Resources Used
- VA Vendee Loan Program Fact Sheet (benefits.va.gov)
- 38 USC 3733: Sale of acquired properties (uscode.house.gov)
- 38 USC 3729: Loan fee, including the 2.25 percent vendee row and exemption categories (uscode.house.gov)
- 38 CFR Part 36: Loan guaranty regulations, including 36.4501 (vendee definition), 36.4528 (origination fee) (govinfo.gov, 2025 edition)
- VA Funding Fee and Closing Costs: Vendee fee row and exemption list (va.gov)
- VA Property Management Service Contract: Listing through local MLS and VRM (benefits.va.gov)
- VRM Mortgage Services Vendee Program and VRM Vendee Loans (vrmco.com)