Buying a Home With a VA Loan - Step-by-Step Guide

Complete VA homebuying guide: COE, preapproval, VA offers, escape clause, appraisal repairs, seller concessions, closing costs, and occupancy requirements.

Buying a Home With a VA Loan - Step-by-Step Guide

Complete VA homebuying guide: COE, preapproval, VA offers, escape clause, appraisal repairs, seller concessions, closing costs, and occupancy requirements.

Buying a Home With a VA Loan

The 9-Step Process

Earnest Money

Seller Concessions

Appraisal Repairs

The VA Escape Clause

Closing Costs

Why VA Offers Sometimes Get Misunderstood

How to Make a VA Offer Stronger

Speak with a VA Loan Expert

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A step-by-step guide from understanding your benefit to closing day.

Earnest money is a deposit showing good faith when making an offer. VA buyers can absolutely pay earnest money — and in competitive markets, doing so can strengthen your offer. The deposit is typically held by a title company or real estate broker and applied toward your closing costs or down payment at closing.

If the deal falls through due to the VA escape clause or appraisal issues, you generally get your earnest money back. Make sure your purchase contract clearly outlines the conditions for refund.

Seller concessions are contributions the seller makes toward your closing costs, prepaids, or points. For VA loans, the maximum seller concession is 4% of the loan amount. This is separate from the seller paying for normal closing costs or repairs required by the VA appraisal.

Seller concessions can be a powerful tool to reduce your out-of-pocket expenses at closing. However, they must be negotiated as part of the purchase contract and disclosed on the Closing Disclosure.

The VA appraisal includes a review of Minimum Property Requirements (MPRs). If the appraiser identifies issues — such as peeling paint, broken windows, missing handrails, or safety hazards — repairs may be required before the loan can close.

Who pays for repairs? It is negotiable. The seller, buyer, or sometimes both can agree to make repairs. The VA does not require the seller to pay, but the repairs must be completed and re-inspected before closing. Discuss this with your agent before writing the offer.

The VA escape clause (also called the VA amendatory clause) is a required contract addendum that protects the buyer. It states that if the property does not appraise for at least the contract price, the buyer is not obligated to complete the purchase and can recover their earnest money.

This clause must be included in every VA purchase contract. It is not optional. Some listing agents and sellers mistakenly believe this clause makes the buyer weak — in reality, it simply protects you from overpaying for a home that does not appraise. You can still choose to proceed if you pay the difference in cash, but you are not required to.

VA loans limit the closing costs that the buyer can pay. The VA funding fee is the most significant buyer cost, though it can be financed into the loan. Other common costs include the appraisal fee, credit report, title insurance, recording fees, and prepaid taxes and insurance.

Certain fees — such as attorney fees, prepayment penalties, and real estate broker fees charged to the buyer — are not allowed on VA loans. The seller, lender, or agent may pay these, but they cannot be charged to the Veteran buyer. Ask your lender for a full breakdown.

Some sellers and agents mistakenly believe that VA offers are risky, slow, or complicated. This usually stems from outdated experiences or working with agents who do not understand VA loans. In reality, VA loans can close as quickly as conventional loans when handled by experienced professionals.

To overcome this bias, your agent should communicate clearly with the listing agent, explain the VA process, highlight your strong preapproval, and present a clean offer with reasonable timelines.

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Clear, lender-neutral education for Veterans, service members, and real estate professionals.

This website is for educational purposes only and is not affiliated with the U.S. Department of Veterans Affairs. VA loans are made by private lenders and guaranteed by the Department of Veterans Affairs. Guidelines, lender overlays, and eligibility rules can change. This site does not offer loans, rates, or approvals. Always verify current guidelines with official VA resources and consult with qualified professionals before making financial decisions.

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