Difficulty: Easy

Average Score: 75%

A veteran wants a $90000 home and has $5000 cash. The VA loan will allow the veteran to

Rationale

buy the house after a $5000 down payment.

The VA loan program allows veterans to purchase homes with little to no down payment, but in this scenario, the veteran can use the $5,000 cash as a down payment towards the $90,000 home, making the purchase feasible.

A (buy the house after a $5000 down payment) CORRECT

This choice is correct because the veteran can utilize the $5,000 as a down payment, which aligns with VA loan guidelines allowing for such arrangements. The remaining balance can be covered by the VA loan, making it possible for the veteran to buy the house.

B (not secure a VA loan because the limit is $75000) YOUR ANSWER

This option is incorrect as it misrepresents the VA loan limits. While there may be limits based on certain factors, the veteran’s ability to secure a VA loan for a $90,000 home is not solely contingent on a fixed loan limit of $75,000. The VA does allow loans that exceed this amount, especially when the veteran uses a down payment.

C (buy only if price is reduced to $85000) YOUR ANSWER

This statement is incorrect because there is no requirement for the home price to be reduced in order for the veteran to secure the loan. The veteran can purchase the home for $90,000 with the available down payment and VA loan financing.

D (buy only if the seller takes a $5000 second mortgage) YOUR ANSWER

This choice is also incorrect as it suggests a condition that is not necessary. The veteran can buy the house using their $5,000 as a down payment without needing the seller to agree to a second mortgage, which complicates the transaction unnecessarily.

Conclusion

In summary, the veteran can purchase the $90,000 home using the $5,000 cash for a down payment, which is permissible under VA loan regulations. The other options present conditions that are either incorrect or unnecessary for the transaction. VA loans provide flexibility that allows veterans to achieve homeownership without stringent financial barriers.

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