In a housing market where every offer counts, having a VA loan could be your ticket to standing out—even when homes are already under contract. If you’re navigating contingent or pending listings, understanding the strategic edge of the VA loan isn’t just helpful—it’s essential.
The VA loan offers zero down payment, no private mortgage insurance (PMI), and competitive interest rates—giving eligible buyers a strong footing in multiple-offer and contingent deal scenarios. This guide unpacks how to use these features to get ahead in one of the most competitive markets in real estate.
What Is a VA Loan and Why It Matters in Today’s Market
The VA loan is a government-backed mortgage program created in 1944 by the U.S. Department of Veterans Affairs (VA) to help veterans, active-duty service members, and eligible surviving spouses become homeowners. Unlike traditional loans, VA loans are specifically designed to reduce barriers to entry by:
- Eliminating the need for a down payment
- Removing PMI requirements
- Offering lower interest rates than many conventional loans
- Limiting closing costs
- Providing flexible credit underwriting guidelines
In markets where properties are marked as “contingent” or “pending,” buyers using VA loans may be seen as less competitive due to myths about slower appraisals or stricter requirements. But with updated VA guidelines and the right strategy, VA buyers can flip that narrative and stand out—even against all-cash offers.
Fact: According to the VA, over 1 million VA-backed loans were issued in 2023 alone, with a steady increase in first-time users year over year.
Why VA Loans Give You an Edge in Contingent or Pending Markets
If you’ve ever had your heart set on a home only to see the listing turn contingent before you could act, you’re not alone. Here’s how a VA loan can help you stay competitive—even after a property is under contract.
1. Flexible Financing Terms Mean Better Offers
In a bidding war, the strength of your offer isn’t just the dollar amount—it’s also the terms. With no down payment and no PMI, you can make stronger bids and allocate cash toward:
- A larger earnest money deposit
- Covering appraisal gaps
- Paying closing costs or concessions
- Offering to cover the buyer-agent commission (newly allowed as of 2024)
These strategies make your offer more attractive to sellers deciding between backup offers or dealing with flaky primary buyers.
2. Speed Matters—VA Loans Can Close Fast
Contrary to outdated beliefs, VA loans don’t have to be slow. In fact, many close in as little as 21 days when working with a VA-savvy lender and agent. The key is preparation.
- Get pre-approved, not just pre-qualified
- Choose a lender experienced in VA underwriting
- Work with agents familiar with VA appraisal timelines
3. Appraisal and Inspection Protections Boost Buyer Confidence
The VA loan offers unique buyer protections, such as the VA Notice of Value (NOV) and escape clause, which protect borrowers from overpaying. In a pending deal, this can offer a layer of confidence, especially in fast-paced negotiations where buyers might otherwise waive contingencies.
The 2024 VA Loan Update: Why It Matters
A major shift occurred in August 2024: the VA revised its policies to allow veterans and service members to pay buyer-broker fees under certain conditions. This update comes in response to changes in how real estate commissions are structured, allowing VA buyers to:
- Compete fairly with conventional and cash buyers
- Offer more flexible terms to sellers
- Navigate post-settlement commission reform with ease
Pro Tip: Use this update strategically by working with your agent to include these terms in your offer, especially when competing on a contingent listing.
VA Loan vs. Other Loan Types: A Competitive Breakdown
Here’s how VA loans stack up against conventional and FHA loans in key categories:
| Feature | VA Loan | Conventional Loan | FHA Loan |
| Down Payment | 0% | 5%–20% | 3.5% |
| Private Mortgage Insurance | None | Required if <20% down | Required |
| Credit Score Requirements | As low as 580 (flexible) | Typically 620+ | 580+ |
| Interest Rates | Lower than conventional average | Varies | Slightly higher |
| Closing Costs | Limited by VA | Varies | Varies |
| Loan Assumability | Yes | Limited | Yes |
VA loans are fully assumable, making them more appealing to future buyers in a rising rate environment.
How to Win with a VA Loan in a Contingent or Pending Market: A Step-by-Step Guide
Even if you’re entering late into a bidding situation, here’s how to structure a winning offer with a VA loan.
Step 1: Get Pre-Approved with a VA-Approved Lender
- Provide proof of eligibility via a Certificate of Eligibility (COE)
- Verify income, assets, and credit with your lender
Step 2: Understand Contingent vs. Pending
- Contingent = Offer accepted, but with conditions (e.g., financing, inspections)
- Pending = All contingencies removed; sale is about to close
Focus on contingent properties, but don’t ignore pending ones—backup offers are often accepted in case deals fall through.
Step 3: Make Your Offer Competitive
- Include a cover letter that explains your VA eligibility and financing strength
- Offer flexible timelines to align with the seller’s needs
- Increase your earnest money deposit
- Consider an escalation clause if competing with others
Step 4: Mitigate Misconceptions
- Proactively provide your lender’s contact info to listing agents
- Reassure sellers with a closing timeline and appraisal plan
- Educate your agent about the 2024 policy change regarding broker fees
Common Myths About VA Loans—Debunked
Myth 1: VA Loans Take Too Long to Close
Reality: A prepared VA buyer with a reputable lender can close just as quickly as conventional deals.
Myth 2: VA Appraisals Are Stricter
Reality: VA appraisals focus on minimum property requirements for safety and livability—standards most homes already meet.
Myth 3: VA Buyers Are Less Qualified
Reality: VA borrowers must meet strict income, debt, and credit guidelines. They’re often among the most reliable and committed homebuyers.
FAQs:
Can VA buyers compete with cash offers?
Yes. While cash is king in many scenarios, VA buyers can compete by improving offer terms—such as flexibility, earnest money, and faster closings.
Can I use a VA loan on a contingent property?
Absolutely. VA buyers can submit backup or primary offers on contingent listings and potentially take over if the initial offer falls through.
What are the new VA loan changes in 2024?
As of August 2024, veterans may now pay certain buyer-agent fees—leveling the playing field with non-VA buyers.
Final Thoughts: Make Your VA Loan Work for You
The VA loan isn’t just a mortgage product—it’s a powerful buying strategy. In competitive and contract-heavy markets, it offers a distinct financial and tactical edge. If you’re eligible, using your VA benefits smartly can help you stand out—even in markets where homes seem off the table.
Action Step: Speak with a VA-approved lender and a real estate agent who specializes in VA transactions. Preparation, strategy, and speed are the keys to turning your dream home into a done deal.