This Article On Understanding VA Loans And Agency Lending Guidelines
Understanding VA Loans And Agency Lending Guidelines is very important for homebuyers with less than perfect credit trying to get qualified and pre-approved.
- VA loans are the best loan program in the nation
- The Veterans Administration is not a lender
- The VA is a federal agency that is in charge of insuring and partially guaranteeing VA loans that are in default and/or foreclosed to lenders
- Private lenders originate and fund VA loans
- Due to the VA guarantee, lenders can offer VA home mortgages to borrowers with 100% financing, no mortgage insurance, and low mortgage rates
- For the VA to insure and partially guarantee VA loans, all lenders need to meet the minimum VA Agency Lending Guidelines
- However, lenders can have higher mortgage lending requirements that are above and beyond the minimum VA Agency Guidelines called lender overlays
- This is why not every lender has the same VA lending requirements
- Gustan Cho Associates is a five-star national mortgage company licensed in multiple states with no lender overlays on VA loans
In this article, we will discuss and cover Understanding VA Loans And Agency Lending Guidelines.
Understanding VA Loans: Minimum VA Agency Lending Guidelines
All lenders need to meet the minimum VA Agency Lending Guidelines if they want to make sure the loan they originate is insured by the VA. However, lenders can and often do have higher lending guidelines that are above and beyond the minimum VA Agency Mortgage Guidelines.
Here are the main bullet points of the minimum VA Agency Mortgage Guidelines:
- The VA offers 100% financing to eligible borrowers with an active certificate of eligibility (COE)
- Most homebuyers do not pay closing costs
- Closing costs are normally paid with a sellers concession by the seller and/or a lender credit
- The VA allows up to 4% in sellers concessions by the home seller to be given to homebuyers for closing costs
- There are no minimum credit score requirements on VA loans as long as the borrower can get an approve/eligible per automated underwriting system (AUS)
- There is no maximum debt to income ratio caps on VA loans as long as the borrower can get an approve/eligible per automated underwriting system
- There is a two-year waiting period after Chapter 7 Bankruptcy, foreclosure, deed in lieu of foreclosure, short sale to qualify for VA loans
- Borrowers in Chapter 13 Bankruptcy Repayment Plan can qualify for VA loans during Chapter 13 repayment with Trustee Approval via manual underwriting
- Chapter 13 Bankruptcy does not have to be discharged
- Any borrowers without a two-year seasoning after Chapter 13 Bankruptcy discharged date needs to be manually underwritten
- Outstanding collection and charged-off accounts do not have to be paid to qualify for VA loans
- Only married spouses of the veteran can be co-borrowers on VA loans
- Non-Occupant Co-Borrowers are not allowed on VA loans
- Deferred student loans that are deferred for longer than 12 months are exempt from debt to income ratio calculations by mortgage underwriters
All lenders need to abide initially by the above minimum lending requirements and guidelines for all its borrowers. However, lenders can have additional lending guidelines called lender overlays on VA loans. Gustan Cho Associates does not have any lender overlays on VA home mortgages
What Are Lender Overlays
As mentioned earlier, lender overlays are additional lending guidelines imposed by the individual lenders that are above and beyond the minimum VA Agency Lending Guidelines.
- Due to lender overlays, not all lenders have the same lending requirements on VA loans
- A borrower may meet all lending guidelines set forth by the VA
- However, the borrower may not qualify with a particular lender
- Just because the borrower does not qualify for a VA loan with a particular lender does not mean they do not qualify with a lender with no lender overlays like Gustan Cho Associates
Gustan Cho Associates is a five-star national mortgage company licensed in multiple states with no lender overlays on government and conventional loans.
Typical Common Lender Overlays By Mortgage Lenders On VA Loans
Here are common lender overlays by lenders on VA loans:
- The VA has no minimum credit score requirement
- However, lenders may impose a minimum credit score requirement of 620, 640, 660, 680 FICO as part of their lender overlays
- The VA has no maximum debt to income ratio requirement
- However, the lender may have a maximum debt to income ratio cap at 45% to 50% as part of their overlays
- Outstanding collections and charged-off accounts do not have to be paid to qualify for VA loans
- However, many lenders will require outstanding collections and charged-off accounts to be paid off
Gustan Cho Associates is one of the very few national mortgage companies that have no lender overlays on VA loans. To qualify for a VA loan with a lender with no lender overlays on VA loans, 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. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.
