Selling a VA Loan Home: A Complete Guide for Sellers
If a buyer wants to purchase your home using a VA loan, there's no reason to feel nervous about it. VA loans are backed by the U.S. Department of Veterans Affairs, which means the buyer has already cleared a solid financial screening process. Still, selling a house with a VA loan does come with a few extra requirements you should understand before you sign a contract.
One of the first things sellers ask about is the VA loan earnest money deposit. Just like any other transaction, a VA buyer puts down earnest money to show they're serious about the purchase. This deposit typically ranges from 1% to 3% of the purchase price and is held in escrow until closing. If the deal falls through for a reason covered by the VA financing contingency, the buyer usually gets this money back, so sellers should build that into their expectations.
When it comes to VA requirements for sellers, the property has to meet the VA's Minimum Property Requirements (MPRs). This means the home needs a working heating system, a safe roof, no peeling lead-based paint, functioning electrical and plumbing, and safe, easy access in and out of the home. A VA-approved appraiser will check all of this during the appraisal, and any issues that come up usually need to be fixed before closing.
Sellers also need to know that VA loans don't allow certain closing costs to be charged to the buyer. Costs like termite inspection fees (in most states) and some other charges legally have to be paid by the seller or split differently than in a conventional sale. This is worth discussing with your agent early so there are no surprises at the closing table.
The good news is that selling to a VA buyer is usually a smooth process. VA loans have one of the lowest default rates of any loan type, and buyers using them are often well-qualified. With the right preparation, sellers can close confidently and move on to their next chapter.
Frequently Asked Questions
Do I have to pay the buyer's closing costs on a VA loan?
Not all of them, but VA rules do restrict certain fees the buyer isn't allowed to pay, such as termite inspections in many states. Sellers often cover these instead, though this can be negotiated as part of the offer.
How much is the earnest money deposit for a VA loan?
There's no fixed amount required by the VA. Most VA buyers offer between 1% and 3% of the purchase price, similar to other loan types, though the exact figure is negotiated in the offer.
Can a VA appraisal cause a sale to fall through?
It can if the home doesn't meet the VA's Minimum Property Requirements and the seller isn't willing or able to make repairs. Most issues, like a broken handrail or peeling paint, are minor and quick to fix.
Is it harder to sell a house with a VA loan buyer?
No. VA loans are known for being reliable and well-underwritten. Many sellers avoid VA buyers due to outdated myths, but in reality these transactions close successfully at rates comparable to conventional loans.
Will I get the earnest money if the buyer backs out?
It depends on the contingencies in the contract. If the buyer cancels for a reason protected by the VA financing or appraisal contingency, they usually get their deposit back. Outside of those protections, the seller may be entitled to keep it.
