It’s Getting Easier to get a VA Loan offer accepted in Orange County, CA

It's getting easier to get a VA Loan offer accepted in Orange County, CA. The last few years have been tough for home buyers using VA financing. Even though VA is a very easy loan to close, at least for lender who specialize in VA financing, sellers have always shied away from VA buyers. The reason vary and are mostly due to misinformation, old information, and "myths" about the VA loan program. But what made it even harder for VA buyers since the beginning of COVID was the extreme shortage of homes for sale.

Inventory levels have increased, but still have a ways to go.

Supply Shortage = Extreme Sellers Market

When COVID started in early 2020 the real estate market had slowed down. Home buyers and sellers put their plans on hold. Sellers didn't want people walking through their home and buyers were facing their own disruptions. Within months things changed. Employers allowed their employees to work from anywhere. Demand from homebuyers increased quickly, but with very little supply on the market home prices began to rise quickly. To complicate things even more, mortgage rates dropped to record levels, making home financing cheap. This just added more buyers to compete for a limited supply of home. I've heard the real estate market during this period called an Extreme Sellers Market and a Insane Sellers Market. In Orange County and the rest of southern California (and the whole US) there were anywhere from 20 to 40 or more offers on every home. It didn't matter if the home needed work or was in a poor location. Everything sold quickly and for more than the listed price. 

In a normal balanced market the listing price is what the seller is hoping to get for tor the sale of their home. They may get a few offers under or above the listing price and after some negotiations they may even help pay some of the buyers closing costs. But during the Extreme Seller Market of 2020 and 2021 the list price was more of a starting point. A floor price. Bidding wars ensued. The buyers that had the best shot at winning a bidding war were those with a big down payment or even just straight cash buyers. These buyers could waive the appraisal, paying above the appraised value. Plus they could waive the inspections, which is crazy but is what it took in some situations.

And this is why VA buyers had a very difficult time getting an offer accepted. A VA buyer planning to take advantage of 100% financing was usually not in a position to pay more that the home would appraise. If there were 20, 30, or 40 offers, the listing agent needed to quickly eliminate the weakest offers. A 100% financing offer was considered a weak offer in this scenario. Even Veterans who had a fully underwritten PreApproval and were willing to waive the loan contingency faced the challenge of competing against offers from other buyers bidding above what the property would appraise for. 

OC Inventory levels are rising but still have ways to go.

Why is it Now Easier for VA Buyers in 2022

2022 has gotten off to an interesting start. Mortgage rates began rising immediately after the New Year. My May mortgage rates are more than 2% higher than they were in 2021. This has helped to put a damper on demand (the numbers of buyers actively looking to buy a home). Sellers are more willing to consider offers from buyers with low down payments, including VA buyers with $0 down payment. Homes are sitting on the market longer, resulting in increased inventory. There are now fewer offers to compete with. It is still a sellers market in Orange County and southern California, but it's not as bad as it was a few months ago. 

What a VA Buyer should do to be as competitive as possible

There are things that any buyer should do before they begin their home search. And especially before they make an offer. It's even more important for VA buyers to get "all of their ducks in a row". 

  1. Get a Fully Underwritten PreApproval. Each lender seems to have their own definition of what a "fully underwritten PreApproval" is. Most lenders will just have a loan officer do a quick review and run the loan through Desktop Underwriter, which is Fannie Mae's automated underwriting engine. The problem with this is if the loan officer calculates income differently from what a VA underwriter calculates, then the loan could be declined in the middle of escrow. Some lenders, like Fairway Independent Mortgage Corporation, will do a full processing of the loan. Loan Disclosures are sent out as if the VA buyer already has an accepted offer. Income and assets are documented and VERIFIED using Verification of Assets and Verification's of Income. Then the loan is submitted to an underwriter for a full review and approval. Typically a Conditional VA Loan Approval is then issued. The non-property related conditions are then cleared. This is known as the Fairway Advantage Approval Program. The Fairway Advantage take the stress out of the homebuying process.
  2. Cash Guarantee. Fairway Independent Mortgage includes a Cash Guarantee to the seller when the buyer has gone through the Fairway Advantage program. Fairway guarantees the loan will close, and on time, or Fairway will either buy the property to close the transaction or will issue the seller a $10,000 check if the seller wants to keep the property and try to sell again. The guarantee is triggered if financing falls apart due to a financing reason. For example, if the buyers loses their job in the middle of escrow and is no longer qualified to buy the home, Fairway will buy the home. If the buyer purchases a car and takes on a big payment and no longer qualifies (this would not be smart on the buyers part, but you never know) Fairway will buy the property. If the appraisal comes in low then Fairway will either buy the property for the lower of the appraised value of the purchase price. If the seller wants to put the home back on the market, Fairway will give the seller $10,000. This is Fairway Mortgage's way of getting the point across that it stands behind it's Fairway Advantage home buyers.
  3. Get a VA Purchase Analysis before making an offer. It is important to know the numbers before making an offer. The VA lender should be able to present the numbers in a clear and concise manner so that the buyer has a very accurate idea of what the full payment will be including taxes, insurance, and HOA dues. And the VA Purchase Analysis should also have a fairly accurate estimate of how much money will be needed to close escrow. Even though VA does not require a down payment, there are still closing costs and Prepaid expenses that need to be covered. Knowing how much will be needed will eliminate surprises at the closing table.

Request your FREE VA Purchase Analysis

The first step in the home purchase process is to request a Purchase Analysis. In this case, a VA Purchase Analysis. The VA Purchase Analysis will give you a clear and concise breakdown of the numbers you need to know, side by side. 

FREE VA Loan Purchase Analysis

Authored by Tim Storm, a California Mortgage Loan Officer MLO 223456 – Please contact my office at Fairway Independent Mortgage Corporation. Direct line is 949-829-1846Authored by Tim Storm, a California Mortgage Loan Officer MLO 223456 – Please contact my office at Fairway Independent Mortgage Corporation. Direct line is 949-829-1846.

Buying an Orange County, CA Home with a VA Loan in 2022

Buying a home in Orange County is super competitive in 2022 no matter what type of financing a home buyer is using for the purchase. But for those Veterans using a VA loan in Orange County to purchase a home, they will find the competition to be extra challenging. What is it that makes it more difficult to use the VA loan to buy a home versus other types of home loans?

Why are Sellers are Afraid of the VA Loan Program?

I've been closing VA loans in Orange County, CA for over 30 years. When I first got in mortgage lending the VA loan program was not widely used, since only Veterans, Active Military, and surviving spouses (in some circumstances) have access to the program. But because of how the market was in 1990, it wasn't that difficult to get an offer accepted for a Veteran using the VA loan to buy their home. Still, it was generally accepted and expected that the seller would pay for most of the Veterans closing costs and that their may be repairs required by the VA appraiser (or termite inspection) that would need to be completed prior to the closing of the loan. Back in the 90's, before the internet took hold, it took longer to close a VA loan. Retrieving the Certificate of Eligibility was hard work. More than once I personally drove from Orange County to the downtown Los Angeles VA office to file paperwork at "the window" and get the paper COE for a client. Although compliance wasn't as difficult then as it is now, VA loans just took longer to close than other types of loans. Another important restriction that got in the way of the VA loan program was the loan limit for $0 down financing.  

That was then and this is now. That VA loan limit thing made it very hard for a Veteran to buy a home in Orange County prior to 2008. In 2005 the median home price in Orange County was $719,619. The VA loan limit was was $359,650. Needless to say, there were a few years there where the VA loan program barely existed in Orange County because of high home prices. Veterans were bypassing the VA loan program altogether and instead using risky "80-20" programs, along with anyone else who wanted to buy a home with $0 down payment. After the mortgage meltdown in 2006, changes were made and the VA loan limits were dramatically increased. By 2009 the VA loan limit for $0 down financing in Orange County was $737,500. The median home price in Orange County had dropped to $544,300. This made the VA loan program more popular than ever, at least in Orange County.

VA Loan Limits removed in 2020

2020 was a huge year for the VA loan program. There were now no restrictive loan limits for 100% financing using the VA loan program. In Orange County, where the Median home price reached $950,000 in 2020, being able to buy a home with no down payment, even if the price were $1,500,000 or more, meant the VA loan program was again the best financing option for nearly any Veteran buying a home. But as the market heated up, it became more difficult to get an offer accepted from a Veteran using the VA loan. There are several reasons for this, but the most typical goes back to old, commonly held, beliefs about the difficulty in closing a VA loan. Below are a few common "myths" about the VA loan program.

  • Seller has to pay the Veterans closing costs. This is not true. Back in the day (like in 1990) it was very common for sellers to pay the VA buyers closing costs, but it wasn't mandatory. The rules for "non-allowable" costs eased and became more clear in later years. While a lender does need to be cognizant of certain fees, it's important to understand the 1% rule. Basically, fees that VA considers "non-allowable" need to be less than 1% of the loan balance. The biggest fees included in the 1% calculation include the escrow fee, notary, and lender Origination fees. Fees that are not included are Title, appraisal, recording, and discount points. The escrow fee tends to be the biggest "non-allowable" fee. The formula most escrow companies use to determine their fee does not result in anything near 1% of the loan amount, unless the purchase price is under $150,000. But that doesn't happen in Orange County, so we will rarely if ever need to worry about hitting the 1% cap. 
  • Seller has to pay repairs. This is not true. VA is just like any other type of financing when it comes to paying for repairs. While VA does require a clear termite report, it does not require the seller pay for the repairs. In a competitive real estate market, a Veteran can choose to pay for repairs. It's all negotiable. 
  • VA Appraisers are conservative.  Not true. VA appraisers are also Conventional loan appraisers. The valuation process is the same for a VA appraisal as it is for any other type of appraisal.
  • Veterans have no "skin in the game" making their offer less likely to close. This is definitely not true. The VA loan program has for years had the lowest default rate of any other loan program. And why should a seller be concerned about the percentage of down payment when they will get their money whether it comes from a VA loan or someone paying cash. If the Veteran is working with a local Orange County VA Lender and has gotten a Fully Underwritten VA Approval, their offer is as solid, if not more solid, than any other offer.
  • VA Loans take longer to close. I'll say this is not true, but there are loan officers and lenders who don't close many VA loans, which can make the processing of a VA loan challenging. For an Orange County Loan officer who specializes in VA loans, the VA program can be the easiest loan program to close. And fast. VA is more flexible than other programs when it comes to credit, debt to income ratios, and of course down payment. There are less hurdles to closing a VA loan than any other type of Conventional financing. Any lender who tells you different is not a VA specialist.

The Challenge of Buying a Home with a VA Loan in a Super Hot Sellers Market

Buying an Orange County home in 2022 is a challenge no matter what type of loan you are using. Sellers are getting anywhere from 5 to 50 offers on their homes in the first week on the market. Many times the winning bids are those who are willing to pay more than the potential appraised value, which can quickly rule out any buyers with less than 10% down. This does make it extra challenging if a VA borrower is planning on $0 down financing. So how does a Veteran in Orange County compete?

How Veterans can make a Competitive Offer in Orange County?

There are strategies that will help make a VA offer more competitive than other offers. For most of 2021 and into 2022 we have been in an extreme "sellers market" due to a big imbalance between the supply of homes available for potential home buyers and the number of buyers who want to own a home. Here is what you need to do to compete with other buyers who may be less prepared.

  • Get Fully Approved BEFORE you make an offer. This is very important. Do not wait until you've already found a home to get PreApproved. And if a lender gives you a "PreApproval" without reviewing your documentation then just know that you are NOT PreApproved. And if a lender gives you a PreApproval without verifying income or assets and having an underwriter sign off on the approval, then you are not actually PreApproved. To make sure you are fully PreApproved, you will want to go with a lender who will send your loan into an underwriter. Not many lenders will do this. Fairway Independent Mortgage Corp does a full approval, which is known as the Fairway Advantage. If you have a fully underwritten Fairway Advantage approval then you will be in position to remove the loan contingency immediately.
  • Offer a shortened inspection contingency. Buyers will use the inspection as a way to back out of a transactions. If you are serious about wanting a home then offer a short inspection time period. Get the inspections done in the first few days of escrow.
  • If possible, offer at least a partial appraisal waiver. While someone who has a large down payment may be able to waive the appraisal contingency, even someone with a minimal down payment or no down payment can potentially set a "floor" for the appraised value. For example, let's say the offer price is $710,000 but the potential appraised value is $700,000. Maybe even lower. If the Veteran has $10,000 available then they could adjust their offer to allow for an appraisal as low as $700,000 even though their purchase price will be $710,000. If the appraisal comes in at $690,000 then the buyer still has an "out" since it was not a full appraisal waiver. This is also known as an appraisal gap strategy.
  • Allow the seller to "rent back" for free up to 60 days after closing. This can put your offer at the top of the pile. The seller is going to be a buyer on their next home and will be dealing with the same hot market that you are dealing with. They may not have a new home lined up yet. By offering a seller "rent back" for free or a minimal dollar amount it will allow the seller to make non-contingent offers and potentially close very fast on their next purchase. I've had several VA clients who have used this strategy to get their offer accepted. The maximum time period for a rent back is 60 days since that is the time period allowed before the buyer has to move into the home to meet the "owner occupancy" requirement for a VA loan. This is true of any Conventional loan where the home is a Primary residence.

Buy your Home Before Values go Higher in 2022

Property values are expected to increase in 2022 by between 5% and 9% depending on who you are listening to. This means that a home valued at $700,000 today will be valued at $735,000 - $763,000 in 12 months, Why wait? Find out what the numbers look like for your potential purchase using the VA loan program. Have us prepare a VA Purchase Analysis based on what you qualify for, what your payment comfort level is, and what fit's in your budget.

Authored by Tim Storm, a California Mortgage Loan Officer MLO 223456 – Please contact my office at Fairway Independent Mortgage Corporation. Direct line is 949-829-1846Authored by Tim Storm, a California Mortgage Loan Officer MLO 223456 – Please contact my office at Fairway Independent Mortgage Corporation. Direct line is 949-829-1846.

CalVet Home Loan versus VA Home Loan | Which is Better?

California Veterans can choose between the CalVet home loan or the VA home loan. Both programs offer Zero Down Financing. But which program is better? It depends on several factors. The type of property you are purchasing, the purchase price of the home, and your long term plans with the home. A home loan is a major decision and it is important to select the right loan program for your situation. For California Veterans, the two primary programs are the Calvet and VA home loan programs. While both programs are very similar, there are important differences to consider before selecting the best program for you.

Eligibility for a CalVet Home Loan versus a VA Home Loan:

Both programs require a period of active duty service of at least 90 days as well as a discharge status other than dishonorable. CalVet is only available to veterans and active duty military living in California, while VA is available nationwide.

CalVet Home Loan:

When using the CalVet program, the desired home is purchased by CalVet and then sold to the veteran using a contract of sale. CalVet holds legal title, while equitable title is given to the veteran occupying the property. This process still gives veterans several ownership rights including property tax and mortgage interest deductions. Since CalVet holds the legal title, they can obtain a lower group rate for homeowner’s insurance. With CalVet holding legal title to your property, it can make it difficult to refinance or obtain a second mortgage in the future. CalVet does not refinance their loans, so if a Veteran wishes to takes advantage of lower rates or pull cash out based on increased equity, they will need to refinance out of the CalVet loan. The CalVet loan program is very flexible when it comes to purchasing manufactured homes, and is the better option if the manufactured home is on leased land.Orange County Veterans, home buyer

VA Home Loan:

With a VA loan, the veteran receives full ownership rights and legal title to the property, just like most other types of home loan programs. VA also allows for more flexibility in terms of occupying the property. With a VA loan the veteran must initially occupy the property, but after a few years they are able to live elsewhere and rent out the property. Compared to CalVet, which requires the purchased property to be the primary residence until the loan is fully repaid. Also, VA loans are much easier to refinance. VA offers the Interest Rate Reduction Refinance Loan (IRRRL), which allows the Veteran to refinance their loan to lower their interest rate and payment without doing a new appraisal and without supplying income documentation.  Also, while the VA loan program does allow for financing of manufactured homes there are not many lenders who will fund a VA loan on a manufactured home, especially if it is on leased land.

County VA Loan Limits and Loan Entitlements:

The size of the loan you need will likely influence which program better suits your needs based on which county you live in.  In Orange and Los Angeles counties the current VA loan limit is $625,500 whereas in Riverside County the current loan limit is $417,000. It is even possible to get a Jumbo VA loan that is above the county $0 down loan limit by coming in with a down payment. VA loans in the $800,000 to $1,000,000 range are not unusual.

Understanding your options are very important. Make sure to research both VA and CalVet to make sure you are choosing the right loan program for your needs.

Authored by Tim Storm, an Orange County VA Loan Officer specializing in VA Loan. MLO 223456. – Please contact my office at the Home Point Financial. My direct line is 949-640-3102. I will prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of the your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.

Orange County Home Sellers Who Don’t Accept Offers from VA Buyers are Losing Money

Home Sellers are losing moneywhen theyHome sellers in Orange County who don’t accept offers from VA buyers may be losing money. Not taking all offers seriously is a bad strategy in any situation, but avoiding offers from a Veteran using VA financing is just bad all the way around. There are several reasons why there is a perception that VA buyers may not make it to the closing table, but there are plenty of reasons why VA buyers actually do close, and most likely at a higher close rate than other types of loans.

Myths about the VA Loan Program

There are several myths about the VA loan program which seem to get in the way of common sense thinking. Below are a few of those myth’s.

  • Myth 1 – The seller is required to pay closing costs for the VA buyer.  This is not true. While there are certain closing costs that are known as “non-allowables”, the VA buyer is allowed in many cases to pay those costs. In the old days, which for this article we’ll say is back in the 90’s, it was common for the seller to pay closing costs for the VA buyer. At the very least they would pay the “non-allowable costs”. The Non-Allowables include the lender admin fees (underwriting, processing, etc), escrow closing, notary, and a few other smaller fees. However, if Veteran is allowed to pay up to 1% of the loan amount in “non-allowables” if there is not a 1% Loan Origination Fee. In most cases lenders do not charge a loan origination fee on VA loans. Many lenders don’t even charge a lender fee. This means there is only the escrow closing fee, which in most cases is less than 1% of the loan amount. Even better, many lenders offer VA loan options where there is a lender credit going back to the VA buyer that will cover all closing costs and prepaid expenses. Other than typical termite clearance fees, which are common on any real estate transaction, a seller shouldn’t have to pay any closing costs for the VA buyer unless they want to.
  • Myth 2 – The VA appraisal process is stringent and the valuation is conservative. This also is not true. While the VA appraisal process is a little different than for Conventional financing, the valuation process is no different than any other type of appraisal. As a matter of fact, most VA appraisers are also Conventional loan and FHA appraisers. They will be looking at the same sales comparables and making the same adjustments no matter what type of appraisal they are doing. A VA appraiser will be looking for safety issues with the property (FHA does this as well). So if there are holes in the floor, loose wires hanging from sockets, broken windows, or peeling lead based paint, then the VA appraiser may call that out and require repairs. However, most buyers using any type of financing will have a Home Inspection Report completed, which would be calling out the same repairs. This should not be a concern.
  • Myth 3 – The VA buyer has no “skin in the game”, making their offer weak.  This couldn’t be further from the truth. An interesting fact about the VA loan program is that it has the lowest default rate of any type of loan program, even though there is no down payment required in most cases. Veterans have character and have proven that they will stay within their budget and meet their obligations.In most cases, the VA buyer should have been Prequalified or PreApproved before making the offer on the home. The seller is going to get paid whether the Veteran buys the home with all cash or uses 100% financing. (I recently had a Veteran in Orange County make an offer on a home in the $600,000 price range. It would have been a 30 day escrow. The seller ignored the offer and accepted an offer with Conventional financing that was $10,000 under the VA buyers offer. Thus, this article.)

There was recently a great article in the LA Times titled “Sellers who ignore VA buyers are missing out” which makes several strong points about why sellers should take an offer from a VA buyer seriously.

The Truth About VA Loans in Orange County, CA

The truth is that the VA loan program in Orange County is very strong. The 2015 VA loan limit for Orange County is $625,500. This means an Orange County Veteran can purchase a home with no down payment up to that amount. But it is also possible to get a Jumbo VA Loan, which is what happens when a Veteran purchases a home with VA financing that is higher than the VA loan limit for 100% financing. Many local Orange County, CA VA lenders will lend as high as $1,500,000 on a VA loan. There is a down payment required, but not much. The down payment is equal to 25% of the difference between the $625,500 loan limit and the purchase price. For example, if a Veteran is buying a home for $825,500 (and even $200,000 above the limit) then the down payment would be $50,000 and the VA loan would be $775,500. That works out to only 6% down payment for the Veteran on an $825,500 price. Along with the other benefits to the Veteran of having no monthly mortgage insurance, competitive 30 year fixed rates, flexible qualifying when it comes to credit and debt to income ratios,this makes the VA loan program an excellent option for both the VA buyer and the seller.

The first step for the VA Buyer is to talk to an Orange County VA loan specialist who can prepare custom loan scenarios based on the Veterans long and short term financial goals. A VA specialist should be able to educate the buyer on how the numbers work and how it will fit in to their budget. By the time a VA Buyer is ready to make an offer on a home they should already know all they need to know about the financing.


Authored by Tim Storm, a California Mortgage Loan Officer MLO 223456 – Please contact my office at the Emery Financial. Direct line at 949-640-3102. I prepare custom VA loan scenarios which will be matched up to your financial goals, both long and short term. I also prepare a Video Explanation of your scenarios so that you are able to fully understand the numbers BEFORE you have started the loan process.

What FICO Score is Required for a VA Loan?

A common question by Orange County veterans interested in using VA financing to purchase or refinance a home is “what is the minimum FICO required?” The answer to this question can vary from lender to lender. Many lenders require a minimum of 620. But there are lenders who will allow FICO scores as low as 580 or lower.

Minimum FICO Scoring Tied to Loan Amount and Purposerefinance to va loan

VA lenders may  adjust the minimum FICO score depending on the loan amount and purpose of the loan. For example, many lenders will allow a minimum FICO of 620 only when it is a purchase loan and the loan amount is $453,100 or less. A loan amount greater than $453,100, which is considered a “high balance” is common in Orange County, may require a minimum FICO of 640. A refinance may have a different set of requirements. A refinance of a Conventional loan to a VA loan where the loan amount is less than $453,100 may require a FICO score of at least 640, while VA loans greater than $453,100 require a minimum FICO of 660. The VA loan limit for 100% financing in Orange County in 2018 is $679,650. Loan amounts above $679,650 are possible but would require some equity or down payment. A VA loan above the county limits for 100% financing is considered a “Jumbo VA Loan.”

Other VA Loan Credit Requirements

Overall, VA is one of the most flexible loan programs when it comes to credit. A Veteran can get a $0 down VA loan in Orange County only two years after a bankruptcy or foreclosure. Most loan programs require at least 4 fours seasoning after a foreclosure, if not closer to 7 years. And more down payment. But with VA, the 2 year requirement makes it a very flexible program. There is no seasoning requirement for a short sale.

How is the FICO Score Determined

FICO, which is the acronym for Fair Isaac Company, is a program which is used by the credit bureaus to determine a borrowers creditworthiness. There are different versions of FICO depending on what a person is financing. The FICO score shown on a credit report at a car dealership will be different than the FICO score pulled by a lender. There are different factors that a home lender deems to be important versus what a car lender will think is important. Also, there are other types of scores that are readily available to consumers, including the Vantage Score. However, the only way to get your actual FICO score that a mortgage lender will see if to go to a mortgage lender.

Get PreApproved for a VA Loan

One of the biggest reasons why it is so important to get PreApproved for a VA loan prior to searching for a home is because of the credit report. Even the best borrowers can sometimes have a surprise on their credit report. Finding this out and clearing any credit report errors prior to finding the home of your dreams is important if the closing is to be a smooth transaction. This is why the first step for a Veteran in Orange County who is thinking of using VA financing to buy a home should always be to call a local Orange County VA lender.

Authored by Tim Storm, a California Mortgage Loan Officer MLO 223456 – Please contact my office at the Home Point Financial (NMLS 7706). Direct line at 949-640-3102.