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A veteran wants to buy a house priced at $90,000. The VA appraised the house at $85,000. In this situation, the veteran

Rationale

The veteran may buy the property with the VA loan only if the price is reduced to $85,000.

In this case, the VA appraisal of $85,000 establishes the maximum loan amount the veteran can secure through the VA loan program. To proceed with the purchase, the sale price must align with the appraised value, ensuring the loan does not exceed this amount.

A (may use the VA loan to buy the house after making a down payment of $5,000) YOUR ANSWER

This statement is incorrect because VA loans typically do not require a down payment. However, since the appraised value is lower than the sale price, using the loan in this manner would not be permitted without adjusting the purchase price to the appraised value.

B (cannot secure a VA loan because such loans are limited to a maximum of $75,000) YOUR ANSWER

This option is misleading as VA loans do not have a blanket maximum limit of $75,000. Instead, they are based on the appraised value of the property. In this scenario, the appraised value of $85,000 becomes the critical figure for loan eligibility, not a fixed cap.

C (may buy the property with the VA loan only if the price is reduced to $85,000) CORRECT

This is the correct choice, as the VA appraised value of $85,000 dictates that the veteran can only secure a loan for this amount. Therefore, the sale price must match the appraised value for the VA loan to be utilized.

D (may buy the property with the VA loan only if the seller agrees to take back a second mortgage for $5,000) YOUR ANSWER

This option is incorrect because a second mortgage is not a requirement for obtaining a VA loan. The veteran cannot utilize the VA loan unless the purchase price is adjusted to the appraised amount, making this option unnecessary.

Conclusion

The veteran's ability to purchase the house hinges on the sale price being adjusted to match the VA appraisal of $85,000. While options involving down payments or seller financing may seem viable, they do not align with the VA loan program's stipulations. The appraisal ultimately ensures that the loan amount reflects the property's assessed value, maintaining the integrity of the loan process.

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