By Eric Bernstein, President and Co-founder of LendFriend Mortgage
Picture a transaction: a military veteran, fully qualified, submits a competitive VA-backed offer on a home. The listing agent compares it with another bid. The veteran’s is stronger on price. But the other has conventional financing. The agent recommends their client take the conventional offer, citing concerns about the VA appraisal process. The veteran loses the house.
That scenario plays out regularly across the country, and it captures something important about why one of the most borrower-favorable mortgage products in the American market remains, by nearly any measure, dramatically underused. It’s not an issue with the product itself, but the perceptions around it.
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The Listing Agent Problem Is Really an Information Problem
The concern that listing agent raised—VA appraisals are slow, conditions are unpredictable, deals fall apart—didn’t spring from nowhere. It was formed through real experience, during a period when those things were more often true. VA appraisals in earlier decades came with stricter property condition requirements, longer timelines, and more variables that could derail a closing. Agents who handled those transactions built strong impressions from them, and strong impressions tend to hold.
What has changed is that those impressions are no longer accurate. The improving access to the VA Home Loan Benefit Act of 2022 directly addressed the friction points that defined earlier VA transactions, requiring the VA to update appraisal rules, encourage hybrid and desktop options, and revisit the minimum property requirements that had long been a source of deal complications. Desktop appraisals, which remove the need for a physical inspection in qualifying transactions, became available in mid-2022. Standard turnaround windows now run 7 to 21 business days in most markets.
None of that, however, has translated into a meaningful shift in how many listing agents talk to their clients about VA offers. Updated policy doesn’t always produce updated perception, and the mental model a lot of agents are still working from was formed a decade or more ago. Nothing in the normal course of a transaction gives it reason to change.
Which is the core problem. Listing agents don’t just provide information; they shape decisions. When an agent operating on outdated assumptions recommends against a VA offer, they are effectively exercising veto power over a qualified buyer’s bid based on a problem that has largely been solved. The seller may never know the conventional offer they accepted was the weaker one on paper. The veteran buyer has no recourse. And the listing agent, having acted in what they believed was their client’s best interest, has no reason to revisit the call.
That is the mechanism worth understanding, because it is the same one the data keeps pointing back to.
Scale Turns an Anecdote into a Pattern
One transaction is a story. Fifty-eight thousand is a structural problem.
That is the estimated number of VA loans that go untapped every year, representing roughly $28 billion in unused borrowing capacity. The figure has remained relatively consistent across different rate environments and market conditions, which is itself diagnostic. A product-level problem would produce more variance. A perception problem, embedded in how transactions are being handled at the ground level, would produce exactly this kind of stability.
VA loans currently account for about 8 percent of mortgage originations nationally, down from closer to 10 to 12 percent in recent years. The tighter rate environment explains some of that decline—buyer activity slowed broadly, and origination volumes fell across the board. That part is straightforward.
What is harder to explain is the direction. VA loans carry no down payment requirement, no PMI, and rates that typically run below conventional alternatives. Those are precisely the features that should carry more weight when affordability is under pressure. A product built for constrained buyers should see stronger relative demand in a difficult market. Instead, its share dropped. The product’s strengths are not making it through the transaction chain intact, and the listing agent dynamic described above is a significant part of why.
Three Places Where the Transaction Goes Wrong
The veteran who lost that house to a weaker conventional offer didn’t lose because of their credit profile or their bid. They lost because of decisions made by other people at other points in the process. That is actually useful information, because it means the problem is specific and the interventions are too.
The first is sequencing in the lender conversation. VA eligibility does not always get surfaced at the right moment. A borrower with military service may already be oriented toward a conventional product—pre-qualified, with expectations set—before anyone has raised the VA option as an alternative worth comparing. At that point, introducing it feels like a disruption rather than an upgrade. Certificate of Eligibility checks take minutes, but timing determines whether the result changes anything. The conversation needs to happen before a path has been chosen, not after.
The second gap is at the offer stage. VA appraisal protections are buyer protections, but they are frequently framed as contingencies, variables that introduce uncertainty from the seller’s perspective. A buyer’s agent who can speak specifically to how the current appraisal process works, with accurate timelines and a clear explanation of what the protections actually do, changes the way those terms land. Vague is threatening; specific is manageable. Most VA offers are presented without that specificity.
The third is direct lender outreach to the listing side, an intervention that addresses the perception problem most directly. When a VA offer goes in, a lender who calls the listing agent, walks through the current process, and makes themselves available by name is doing something qualitatively different from submitting paperwork. That conversation replaces an abstraction with a real exchange. The listing agent’s outdated mental model gets tested against an actual person who can answer for the process. It’s probably the highest-leverage move available to lenders working with veteran buyers, and most of them are not making it.
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What That Veteran Buyer Represents
The veteran who lost that house is not alone. Multiply the scenario by 58,000 per year and the shape of the problem becomes clear: a consistently large population of eligible borrowers holding access to a genuinely competitive financing tool, losing ground at transaction after transaction to a perception problem that the industry has not prioritized fixing.
What gets lost is not limited to the purchase itself. A veteran who buys with a VA loan can later use an Interest Rate Reduction Refinance Loan (IRRRL) to lower their rate quickly and at lower cost than a conventional refinance, provided they already have a VA loan in place. That eligibility does not transfer. A veteran guided toward conventional financing at the outset loses both the upfront advantages and that refinancing pathway.
The VA loan is not the weak point here. The product holds up. What doesn’t is the chain of communication and assumption surrounding each transaction. That chain runs directly through the practitioners closest to these deals, and they are the ones best positioned to change it.
About Eric Bernstein
As the President and Co-Founder of LendFriend Mortgage, Eric Bernstein has over 12 years of experience in financial services and wealth management, with a focus on mortgage lending and residential mortgages. His mission is to simplify the mortgage process for homebuyers at every stage, whether purchasing their first home or navigating financing with a more complex financial profile. LendFriend Mortgage was founded in 2018 with a vision of modernizing the homebuying experience and delivering exceptional service. Since then, the company has helped more than 6,000 families achieve homeownership.
