Vendee financing is your friend

Vendee financing is a financial product offerred by the Department of Veterans Affairs through Bank of America. It is offerred on all VA foreclosures. It absolutely rocks. I have used it to acquire two properties this year and am on to my third.

So here are the terms (for non owner occupier): 5% down, and a currently a 5% rate (was 4.5% earlier in 2010) on the entire 95% of the balance!, no PMI either folks, cha ching! They'll pay up to 6% towards closing costs. There is no appraisal. There is NO number of mortgages limit. Seasoned investors can even use 75% of appraised rent for the property being bought towards calculating debt to income ratio. Still need convincing?

The VA fee is 2.25% which is 100% deductible in the first year as qualified mortgage insurance. It's basically prepaid PMI and because its VA its "qualified".

BoA charges a flat $2500 for closing costs and VA wont pay title policy so don't bother asking.

The quality of the properties seems to be much better than the average foreclosures in my area.

The closing process is a bit of a brow beating as far as documentation is concerned. I swear I thought they were going to ask for my first born too. But I guess that is par for the course now giving the new lending market risk aversion.

They are real miserly on coming down on the price. I think because they know how great their financing is. Sometimes it almost seems like you are buying the financing and the house is coming along with it. I've found that by being patient and waiting until the first price adjustment (usually around 3 weeks on market) then coming in 3-6% below usually seals the deal. Don't freak out if someone else beats you to it. About half the contracts these days are falling through so you'll probably get a second chance.

I have found that a property with these financing terms cashflows easily. I'll continue to snap them up as they come on the market

Where to find VA foreclosures with Vendee financing? 

VA.REOTRANS.COM
va.equator.com

I have access to the MLS and just search for "veteran" in the seller name to match Department of Veteran Affairs. Another hint is if it is a foreclosure and you need a pre-approval letter from BoA.

VA Vendee Quick Facts:
• Any purchaser can apply for Vendee Financing. You do not have to be a Veteran.
• Vendee Financing is available for non-owner and
owner occupied.
• Low Interest Rates
• The seller may contribute up to 6% of the contract sale price for closing costs.
• 2.25% VA Funding Fee
• No pre-payment penalties.
• An appraisal is not required for underwriting.
Non-owner occupied only:
• No maximum number of investment properties.

Vendee financing is a loan product offered to individuals to help finance the purchase of VA REO Properties. Vendee Financing will be offered to both veterans and non-veterans. Some of the guidelines are listed below:
• Seller may contribute up to 6% of the contract sales price to pay
for funding fee, closing costs, prepaid and other expenses.
• Vendee mortgages are assumable by qualification.
• Vendee Financing is not a credit score driven product.
• There are two available terms, a 15 and 30 year fixed rate.
Owner Occupied purchase:
• Can be financed with as little as 0% down. The loan amount may be increased up to 2% to finance closing costs, prepaids or other expenses. Funding fee may not be financed.

Non-owner Occupied purchase:
• Can be financed with as little as 5% down. Investors may use 75% of anticipated rent based on appraiser's estimate to offset against the subject property monthly payment.
• Investors must have experience managing rental properties to include anticipated rent on subject property in underwriting.
• No maximum number of investment properties.