VA Credit Score Guidelines on Purchase and Refinance
In this article, we will cover and discuss VA credit score guidelines on home purchase and refinance VA home loans. Gustan Cho Associates gets countless calls daily from borrowers who often are confused with VA Credit Score Guidelines. They contact us after being told by other lenders that they do not qualify for VA loans for one reason and/or another.
Not all mortgage companies have the same lending requirements on VA loans. Most lenders have overlays on VA home loans. Overlays are lending requirements that is higher than the minimum guidelines set forth by the U.S. Department of Veterans Affairs.
Overlays on VA Loans From Mortgage Lenders
Not all mortgage companies have the same lending guidelines on VA loans. Just because one lender says no does not mean a different one will deny you too. Over 80% of our clients at Gustan Cho Associates are borrowers who could not qualify at other lenders due to lender overlays or because the lender did not have the mortgage loan option the borrower was looking for.
Mortgage lenders have an unethical habit of just disclosing their lender overlays and not the minimum agency guidelines of the Veterans Administration. For example, one lender may tell a borrower that the minimum VA credit score requirement is 640 while another says it is 620. Then another lender tells you the VA credit score requirement is 580 FICO. So what is it? We will explain this in the next paragraph. Read on…
VA Agency Guidelines versus Overlays by Mortgage Lenders
They get the conflicting debt-to-income ratio requirement as well on VA loans. Some lenders may say the Department of Veterans Affairs (VA) has a maximum debt-to-income ratio requirement of 45%. Or other lenders may say the VA DTI requirement is 50% DTI. VA Credit Score Guidelines do not have a minimum credit score requirement or a maximum debt-to-income ratio requirement on VA loans.
What Is The VA Minimum Credit Score Guidelines on VA Loans?
But the fact of the matter is the Veterans Affairs Administration has no minimum credit score requirements on VA loans.
In the following sections of this guide on VA Credit Score Guidelines, we will cover the fact of debt to income ratio and credit score guidelines of the Veterans Administration and not what you want to hear or hearsay lender overlays.
Lender Overlays Versus Agency Guidelines on VA Loans
The reason why lenders have different VA Lending Requirements is that they have their own lender overlays on VA loans. Lender overlays are mortgage guidelines that are above and beyond the minimum mortgage guidelines required by the Department of Veterans Affairs (VA). For example, borrowers do not have to pay outstanding collections and/or charged-off accounts to qualify for VA loans per VA Agency Mortgage Guidelines.
VA Guidelines on Oustanding Collections and Charged-Off Accounts
Lenders may require borrowers to pay outstanding collections and charge off accounts even though VA Agency Guidelines do not require them to pay them off. This additional requirement of mandating borrowers to pay outstanding collections and charge off accounts by the individual lender is called a lender overlay by the particular lender.
VA Lender with No Lender Overlays
In this blog, we will cover VA Credit Score Guidelines versus lender overlays and qualifying for VA loans with a mortgage broker with wholesale lenders with no overlays. Gustan Cho Associates is a mortgage company licensed in 48 states with over 190 wholesale lenders. We have investors with no overlays on VA loans. We only go by VA Agency Guidelines and have no additional lender overlays on VA loans.
VA Agency Guidelines
A lender can have any type of overlay. Gustan Cho Associates is one of the very few mortgage companies licensed in multiple states with no lender overlays on government and conventional loans. We are also experts in manual underwriting of VA loans. We can go up to 65% on approve/eligible per AUS files and up to 55% on manual underwriting on VA loans.
Basic VA Credit Score Agency Mortgage Guidelines
The general VA agency mortgage guidelines are lenient. The Veterans Administration sets agency mortgage guidelines that are more lenient than HUD, Fannie Mae, and Freddie Mac so its veterans can qualify for VA loans with ease. There are no minimum credit score is required with an automated underwriting system (AUS) approval.
Debt-To-Income Ratio Guidelines on VA Loans
VA loans has no maximum debt-to-income ratio requirement with an AUS Approval. The team at Gustan Cho Associates has helped thousands of veterans with credit scores down to 500 FICO on a VA manual underwriting with 65% debt ot income ratio get to the closing table.
VA Loans After Bankruptcy
Outstanding collections and/or charged-off accounts do not have to be satisfied unless the AUS conditions the collections or other derogatory credit tradelines be satisfied. There is a 2-year waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale. Borrowers in a Chapter 13 Bankruptcy repayment plan can qualify during the repayment plan after 12 months into the plan with Trustee Approval and manual underwriting.
There is no waiting period after the Chapter 13 Bankruptcy discharge date to qualify for VA loans. Any bankruptcy discharge that has been seasoned less than 2 years needs to be manually underwritten to qualify for VA loans. Late payments in the past 12 months are allowed if the borrower gets automated approval from AUS.
In Conclusion To VA Credit Score Guidelines
The Department of Veterans Affairs (VA) has very lenient credit and debt-to-income ratio guidelines. More so than any other loan program. There are no credit score requirements or debt-to-income ratio requirements on VA loans as long as borrowers can get automated approval by the automated underwriting system.
The team at Gustan Cho Associates has helped thousands of veterans with credit scores down to 500 FICO qualify and get approved for VA loans. We have helped thousands of veterans with debt to income ratio up to 65% debt to income ratio get approved and closed on VA loans.
Get Approved For VA Loans With Bad Credit With Credit Scores Down to 500 FICO
To get qualified or pre-approved or for more information on this topic or other mortgage/real estate-related topics, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates has no lender overlays on government and conventional loans. We have over a dozen non-QM wholesale lending relationships with alternative mortgage and non-QM wholesale lenders. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.
