• Mortgage Underwriting Help Desk

  VA Loan with Low FICO-Late Payment-and Manual Underwriting

  Posted by Brandon on October 28, 2026 at 5:53 pm

  Good morning,

  My name is Michael Smith, and I am a United States Navy veteran currently seeking financing for a home purchase in South Carolina.

  I am already under contract on a home with a purchase price below $300,000. I have paid my earnest money and completed the home inspection. My realtor is currently working with the seller to obtain an extension of the closing date.

  I am reaching out because I need a VA mortgage lender willing to evaluate my complete financial situation rather than automatically decline my application because of one recent 30-day mortgage late payment.

  Here is a summary of my situation:

  • Credit score: My current Experian consumer score is approximately 556. I understand my mortgage FICO scores may differ.

  • Mortgage history: One recent 30-day late payment reported in October 2026. My mortgage is now current.

  • Credit cards: I have recently reduced my Discover, Mission Lane, and USAA balances to approximately 20% utilization.

  • Employment: I have two sources of employment income, along with monthly VA disability compensation.

  • Existing property: I own a home in Indiana with an existing mortgage.

  • Loan requested: VA purchase loan for a primary residence in South Carolina.

  • Property status: Under contract, with the home inspection completed. The VA appraisal has not yet been ordered.

  I would appreciate answers to the following questions:

  1. What is your minimum mortgage FICO score for a VA purchase loan?

  2. Can your company consider an applicant with one recent 30-day mortgage late payment?

  3. Do you offer manual underwriting or case-by-case underwriting reviews?

  4. Do you require 12 consecutive months of on-time mortgage payments?

  5. Can an experienced loan officer or underwriter review my circumstances before I authorize a hard credit inquiry?

  6. Can you assist with an expedited closing if the seller agrees to extend my contract?

  I am prepared to provide income documentation, mortgage statements, bank statements, my VA Certificate of Eligibility, and a written explanation of the late payment.

  I am serious about purchasing this home and would appreciate an opportunity to discuss whether your lending programs can accommodate my circumstances.

  Thank you for your time and consideration.

  • This discussion was modified 20 minutes ago by  Sapna Sharma.
  • This discussion was modified 15 minutes ago by  Sapna Sharma.
  • This discussion was modified 5 minutes ago by  Gustan Cho.
  • This discussion was modified 2 minutes ago by  Gustan Cho.

  Gustan Cho replied 11 minutes ago 2 Members · 1 Reply

  • VA Loan with Low FICO-Late Payment-and Manual Underwriting
• 1 Reply

• 

  Gustan Cho

  Administrator

  October 28, 2026 at 6:19 pm

  Good morning, Michael,

  First and foremost, thank you for your service to our country as a United States Navy veteran. Thank you also for reaching out to Gustan Cho Associates and providing such a detailed explanation of your financial situation.

  The good news is that the VA does not have a minimum credit score requirement, and a recent 30-day late payment on a mortgage does not automatically disqualify you from a VA home loan.

  At Gustan Cho Associates, we specialize in helping borrowers with challenging credit histories, recent late payments, and unique underwriting circumstances. We work with multiple wholesale mortgage lenders, including lenders offering VA loan programs without minimum credit score overlays.

  I reviewed the information you provided and believe your situation warrants a thorough evaluation rather than an automatic denial.

  Let me address your six questions individually.

  1. What is your minimum mortgage FICO score for a VA purchase loan?

  The Department of Veterans Affairs does not establish a minimum credit score for VA loans. Although many mortgage lenders require credit scores of 580, 600, or 620, we work with wholesale lenders that offer VA programs without a minimum credit score requirement.

  Your reported Experian consumer score of approximately 556 does not automatically eliminate your financing options. We would need to review your actual mortgage credit scores, credit history, income, debts, and residual income to determine which programs may be available.

  2. Can you consider an applicant with one recent 30-day mortgage late payment?

  Yes. We can evaluate borrowers with recent late payments on their mortgages on a case-by-case basis.

  VA underwriting guidelines emphasize the borrower’s overall credit history rather than automatically denying an application due to a single late payment.

  However, your late payment on your October 2026 mortgage is very recent. We would need to understand what caused the payment to become delinquent, confirm that the mortgage is now current, and determine whether there are other late payments or derogatory accounts.

  A well-documented explanation, stable employment, adequate residual income, and positive compensating factors may help support your application. Final eligibility will depend on the underwriting findings and the wholesale lender’s requirements.

  3. Do you offer manual underwriting or case-by-case underwriting reviews?

  Yes. Manual underwriting and challenging mortgage scenarios are among our areas of expertise.

  If your application does not receive an automated underwriting approval, we can investigate whether an eligible VA manual underwriting option is available.

  We also use a process commonly known as TBD underwriting, in which a qualified underwriter reviews a file before a property-specific loan approval is issued.

  Because you already have a property under contract, we would review the current transaction and determine the most appropriate underwriting process.

  4. Do you require 12 consecutive months of on-time mortgage payments?

  Not necessarily.

  VA guidelines do not impose a universal requirement that every borrower have 12 consecutive months without a late payment on a mortgage.

  However, a recent late payment on a mortgage is a significant underwriting concern, and individual wholesale lenders may have additional credit history requirements.

  Your October 2026 late payment will require careful consideration. We would need to verify the circumstances, review your overall mortgage payment history, and determine whether a wholesale lender can accept the file.

  5. Can an experienced loan officer or underwriter review my circumstances before I authorize a hard credit inquiry?

  Yes. We can begin with a preliminary review of your situation before you authorize a hard credit inquiry.

  You can provide your current mortgage statement, income information, VA disability award documentation, and an explanation of the late payment.

  We can discuss the potential financing options and identify underwriting concerns before proceeding with a complete mortgage application.

  However, an actual mortgage credit report and any other documentation required by the wholesale lender will ultimately be necessary for a reliable underwriting decision.

  We will discuss the credit authorization process with you beforehand.

  6. Can you assist with an expedited closing if the seller agrees to extend your contract?

  Yes. We can prioritize an urgent file and work toward an expedited closing when the circumstances permit.

  Because you have already completed the home inspection and paid your earnest money, some of the initial purchase steps are behind you.

  However, the VA appraisal still needs to be ordered, and the loan must satisfy credit, income, property, title, and underwriting requirements before closing.

  I would recommend that your real estate agent negotiate a reasonable extension rather than promise the seller a closing date before the underwriting review is complete.

  There are several additional things I would like to evaluate.

  You mentioned that you have two sources of employment income and receive monthly VA disability compensation. Those income sources may strengthen your application if they meet VA qualifying income guidelines.

  Your VA disability compensation may also qualify you for an exemption from the VA funding fee, depending on your eligibility.

  I would also like to understand your plans for your existing home in Indiana. Will you sell that property, retain it as a rental, or continue carrying the mortgage while purchasing your primary residence in South Carolina?

  That information will be important when calculating your debt-to-income ratio, VA residual income, and potentially your available VA entitlement.

  I am also encouraged that you recently reduced your credit card utilization to approximately 20%. Those lower balances may help your mortgage credit scores once the updated balances are reported, although the impact cannot be guaranteed.

  Michael, here is what I recommend.

  Before spending additional money on the purchase or ordering the VA appraisal, let’s complete a preliminary review to determine whether there is a realistic path forward.

  Please provide your most recent mortgage statement, a brief explanation of the October late payment, documentation of your employment income and VA disability compensation, your Certificate of Eligibility if available, and the anticipated closing extension date.

  We can then identify the underwriting challenges, review the available wholesale VA lending options, and discuss the next steps.

  I cannot promise approval without reviewing your complete financial picture. However, I can assure you that your application deserves more consideration than a review based solely on a credit score and one late payment.

  Thank you again for your service, Michael. I look forward to discussing your situation and exploring your available options.

  Respectfully,

  Gustan Cho
  Managing Director | Branch Manager
  NMLS #873293

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