A Veteran can choose to pay above appraisal value, but the difference above the appraised value is a closing cost and not part of the loan. It also cannot be covered by credits and must come from the Veteran’s funds (which can include gift funds).
Pest repairs can also be paid for by the Veteran. It is often a far better use of funds than putting in a down payment or having mortgage insurance with other loan options that don’t require section 1 pest clearance, and ultimately having to keep the bugs as house guests.