Can You Use a VA Loan to Purchase a Foreclosure

By Lynn Lauren

A loan from the U.S. Department of Veterans Affairs, or VA, can be used by a qualified veteran to purchase any type of home, including one that has been foreclosed. However, both the home and the borrower must meet the VA's requirements for the mortgage to close.

The VA started its home-loan program to let veterans purchase homes with a 0 percent down payment and lower credit requirements than conventional financing typically requires.

A VA loan can be used to purchase a home of any type. Additionally, a veteran can refinance his VA loan into another VA loan if the need arises.

VA loans are available with both fixed and variable interest rates. The term can be for 15 or 30 years.

VA loans tend to take longer to close than conventional mortgages. The time from application to closing can range from three to six weeks, depending upon the amount of loans being processed in the VA system.

Many borrowers look to foreclosed homes for a way to purchase a home at a below-value cost. However, this is not always the case. If the borrower who was foreclosed on owed more than the home was worth, the price may be equivalent to non-foreclosed listings.

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