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CAN I QUALIFY FOR MANUAL UNDERWRITING VA LOAN
I am applying by myself using my VA loan. I have a 583 middle credit score, which is currently within the mortgage shopping window. Rocket Mortgage capped me at $120k due to an automated computer overlay, but I need an approval for $200k to get this house. I have 2 continuous years of W-2 income with $3200 monthly, $1663 monthly, tax-free VA disability income, and strong residual income to easily support a $1,500 monthly payment. I need a loan officer who specializes in VA Manual Underwriting to push past the automated caps. Can you help me?
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1 Reply
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It looks like automated underwriting does not capture the full picture of your financial situation.
- Your median credit score is 583.
- You have two years of uninterrupted W-2 employment.
- You receive $1,663 per month in tax-exempt VA disability income.
- Your employment income is $3,200 per month.
- For qualifying, your VA disability income is actually counted as more, which boosts your total qualifying income.
- Your high residual income is a major advantage in VA underwriting.
- You are looking to purchase a home for $200,000, which is a typical loan amount.
Rocket Mortgage and most large lenders use automated underwriting. If the system does not approve you, they usually will not consider manual underwriting due to their own rules.
Reason for Rocket’s $120,000 Limit
Such a Limit May be Due to:
- An automated underwriting system results in a higher debt-to-income ratio.
- Limited depth of credit profile.
- Recent derogatory credit events.
- Internal lender overlays.
- If the automated system gives a negative result, it can reduce the highest loan amount you can qualify for.
Lender Overlays are not VA Requirements
The Value of Manual Underwriting.
With VA manual underwriting, your steady job and strong leftover income matter even more. They also consider your rent history, other positive factors, and disabilities. VA loans are more flexible than most, so your high leftover income really helps you.
Information Needed to Assess $200,000 VA Loan Eligibility
To Pursue Manual Approval, Please Provide the Following:
- Auto loans
- Personal loans
- Student loans
- Credit cards
- Child support
- Location of the property (County)
- Estimated property taxes
- Estimated homeowner’s insurance cost
- Are there charge-offs, collections, late payments, etc.?
- Are there bankruptcies, foreclosures, or repossessions?
Basic Key Calculations Based on the Income Details you Provided:
- W-2 income = $3200/month
- VA Disability = $1663/month
- Total monthly income = $4863
- VA disability income is tax-free and counted higher when figuring out if you qualify.
A $200,000 VA Loan May Result in a Monthly Payment of $1,400 to $1,700, Depending On:
- Interest rates
- Tax implications
- Insurance policies
- HOA fees
With your income, this payment should be affordable as long as you keep your debts low and keep a high leftover income.
Additional Considerations
Ask Loan Providers: Do you Offer True VA Manual Underwriting?
- Do you have a minimum credit score requirement that exceeds VA requirements?
- Would you consider a file with a median score of 583 and unfavorable AUS results for manual underwriting?
- What is your residual income calculation for VA manual underwrites?
- Have you closed VA manual underwrites for loans with a credit score under 620?
Many Lenders Say They Offer VA Loans, But Only a Few Truly Provide Manual Underwriting
.If You Provide the Following:
- Monthly debt obligations,
- The State and County where the property is located,
- The sales price,
- An estimate of the property tax,
- An indication of whether you are exempt from the VA Funding Fee due to a service-connected disability,
If you share this information, I can let you know if a $200,000 VA loan is possible for you and explain the reason behind the $120,000 limit.
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