-
VA Manual Underwriting
VA manual underwriting refers to the process of manually evaluating a mortgage loan application for a home purchase or refinance that is backed by the U.S. Department of Veterans Affairs (VA). VA loans are a type of mortgage loan program available to eligible veterans, active-duty service members, and certain members of the National Guard and Reserves. These loans are designed to help veterans and their families purchase or refinance homes with favorable terms and conditions.
In most cases, VA loans are processed and underwritten using automated systems, which assess factors like credit scores, income, and debt-to-income ratios to determine an applicant’s eligibility and the terms of the loan. However, in some situations, borrowers may not meet the automatic underwriting criteria, and their loan applications will be subject to manual underwriting.
Here are some common reasons why a VA loan application might undergo manual underwriting:
-
Low credit score: If the applicant’s credit score falls below the minimum required for automated underwriting, the loan may need to be manually underwritten.
-
Limited credit history: Applicants with a limited credit history may also require manual underwriting since there may not be enough data for automated evaluation.
-
High debt-to-income ratio: If an applicant’s debt-to-income ratio is higher than the automated underwriting system’s threshold, manual underwriting may be necessary to assess their ability to repay the loan.
-
Irregular income: Borrowers with income that is difficult to document or verify, such as self-employed individuals, may need manual underwriting.
During the manual underwriting process, a human underwriter carefully reviews the borrower’s financial documents, credit history, and other relevant information to make a lending decision. This process may involve more in-depth analysis and documentation than automated underwriting.
It’s important to note that manual underwriting doesn’t necessarily mean that a borrower won’t qualify for a VA loan. It simply means that their application will be evaluated through a more hands-on and thorough process. Borrowers should work closely with their lender to provide all required documentation and information to facilitate the manual underwriting process.
Keep in mind that VA loan eligibility and underwriting guidelines can change over time, so it’s essential to consult with a knowledgeable VA loan specialist or lender to get the most up-to-date information and guidance on the VA loan application process.
-
-
2 Replies
-
What are credit requirements on late payments for manual underwriting on VA loans
-
On a true VA manual you can have no late payments in the last 12 months. After that any collection charge off you do not count for debit ratios. So it’s zero monthly payment unlike all other mortgage products.