Question 68

The veteran may use the VA loan to buy the house after making a down payment of $5,000.

In this scenario, the VA loan allows the veteran to purchase the house, but since the sale price exceeds the appraised value, the veteran must cover the difference with a down payment of $5,000.

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

This option is correct because the veteran can use the VA loan to purchase the house, but since the appraised value is lower than the sale price, the difference of $5,000 must be paid as a down payment to secure the loan.

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

This option is incorrect. VA loans are not limited to a maximum amount of $75,000; instead, they can be for higher amounts depending on the veteran's entitlement and the property's appraised value. The veteran can still obtain a VA loan despite the appraisal being lower than the sale price.

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

This option is incorrect because the veteran does not need to have the price reduced to the appraised value to use the VA loan. Instead, the veteran can proceed with the purchase by making a down payment on the difference.

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

This option is incorrect as well. The VA loan does not require the seller to take back a second mortgage. The veteran can pay the $5,000 difference as a down payment without needing additional financing from the seller.

Conclusion

Option A is definitively correct because it accurately reflects the veteran's ability to use the VA loan while covering the difference between the sale price and the appraised value with a down payment. The other options fail to recognize the flexibility of VA loans and the specific conditions under which they can be utilized, emphasizing the veteran's eligibility to proceed with the purchase.