Lease options for Veterans

[Jessica Marin]

how does lease to purchase work if the buyer is a veteran? I thought veterans didn't have to put a down payment when buying their first home... Unless I'm mistaken... Can someone school me on this? 😬

[Robert Whitelaw]

In my business, I am working pretty heavily with veterans using VA loans. There is no reason that you could not use a VA loan to finance the purchase of a lease option. However, you are going to have a hard time finding a seller that is willing to tie up their property in a lease option without any deposit monies put in by the buyer. If the buyer has not submitted a "deposit" or "earnest money", they have nothing to lose by not exercising the option. One way to get around this - in terms of not giving up a chunk of cash on the front end is to agree on a higher than market rent amount with the overage being designated as your deposit. The only other thing to be aware of is that the VA appraisal is a different animal from a typical appraisal. There is a pretty good chance that the result of this appraisal will be a request to do work on the place before the loan will fund. I have been doing this for over 25 years and while things have gotten more manageable over the last 15 years or so, I still get some odd demands of what must be done before the loan will fund. Another thing to keep in mind is that the VA appraisal is one of the few items I have been able to push back on with positive results when it comes to work they are asking to get done. A good recent example is an appraiser who note "Worn linoleum in the laundry room". This spurred a demand from the VA underwriter to replace or repair the linoleum. I was able to push back and point out that this was solely an aesthetic concern as there were no issues with the floor itself. So when the time comes, you might just be able to prevail with some common sense - and rarely does common sense win the day with lenders.

Hope that helps,

R