Thank you for your service to our country!
As you can see, there's not a lot to pick from in Prescott Valley: http://search.prescottarizonahouses.com/i/18988/prescott_val
I'm familiar with VA loans, and just closed one myself. You won't have any issues finding a home with a good credit score and your income level.
Banks do not enjoy doing VA loans in conjunction with a foreclosure. Why? Because it dips into their bottom line which has already been gouged.
VA 100% financing is available for you. Finding an REO home needing no repairs to meet the VA requirements (peeling paint, termites, cracked windows, etc...) along with the seller concessions to pick up closing costs is mathematically improbable. Usually a bank will not look at a VA loan because they have a string of cash buyers waiting to snap up the properties.
With those specs you put out there, finding a home not sold "as is" seems like the preferable choice. Most REO properties come with a "must sign the AS-IS" addendum because the bank never lived in the home. A VA loan would require the home to be your primary residence. And although an inspection should reveal any problems, do you really want to put your future home in jeopardy with the belief your house will never have "undisclosed" issues?
You can find a nice home for under $200k in Prescott Valley: