VA Qualification Guidelines For Borrowers With Bad Credit

This BLOG On VA Qualification Guidelines For Borrowers With Bad Credit Was UPDATED On January 12th, 2019

There are two types of  VA Qualification Guidelines:

• Agency VA Qualification Guidelines
• Lender Overlays

Not all VA Lenders have the same VA Qualification Guidelines.

• All lenders do need to meet minimum agency VA Qualification Guidelines by the Department of Veterans Affairs
• However, lenders can have their own mortgage overlays

What Are Lender Overlays On VA Loans

The Department Of Veterans Affairs does not have a minimum credit score requirement lenders need to require their borrowers.

• VA also does not have any maximum debt to income requirements
• However, consumers see advertisements by lenders offering VA Loans with minimum requirements
• Most banks will require 640 credit scores
• Many lenders on TV and Cable claim to be reputable VA Lenders but have the minimum credit score and/or debt to income ratio requirements
• Why are lenders advertising with minimum credit score and/or DTI requirements when the VA does not require it?
• This is because most lenders have overlays on VA Loans
• They need to meet the minimum VA Qualification Guidelines
• However, most lenders will require lending requirements above and beyond those of minimum agency VA Qualification Requirements
• This is call lender overlays on VA Loans

Gustan Cho Associates is one of the very few national lenders with no overlays on VA Loans.

VA Qualification Guidelines And Loan Eligibility Requirements

Department Of Veterans Affairs structured VA Loans to be easy and fast-tracked.

• What makes it difficult is lenders requiring overlays after overlays on VA Mortgages
• Gustan Cho Associates does not have any overlays on VA Home Loans
• We just go off by VA Qualification Guidelines and have zero overlays
• As long as borrowers get an approve/eligible per automated underwriting system and borrowers can meet AUS Conditions, Gustan Cho Associates Mortgage Group will not just close the VA Loan but will close the loan on time
• We have in house processors, underwriters, closing department, and operations divisions

VA Qualification Guidelines Checklist

Here are the general VA Qualification Mortgage Guidelines:

• Zero money down and 100% financing on home purchases
• 100% cash-out refinancing available with low credit scores with no mortgage insurance
• Gustan Cho Associates offers manual underwriting on FHA and VA Loans
• No credit score VA Loans with Non-traditional credit
• Non-Traditional credit allowed with a minimum of 3 credit references with a 12-month rating for each
• VA Loans with no overlays for qualified borrowers with a valid certificate of eligibility
• 1-4 units are available for VA loans
• Condos are eligible are allowed with VA Loans as  long as the condo complex is VA Approved
• No minimum credit score requirements
• No maximum debt to income ratio requirements
• Outstanding collections and charged-off accounts do not have to be paid
• Two-year waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale
• Borrowers can qualify for VA Loans one year into Chapter 13 Bankruptcy Repayment Plan
• Chapter 13 Bankruptcy does not have to be discharged
• No waiting period after Chapter 13 Bankruptcy discharged date
• Deferred student loans that are deferred for longer than 12 months are exempt from debt to income ratio calculations

Certificate of Eligibility (COE)

Borrowers need a valid Certificate of Eligibility (COE):

Gustan Cho Associates Mortgage Group can help borrowers obtain their Certificate Of Eligibility if borrowers cannot locate it:

• Retired and/or active member of the U.S. Military with valid COE
• Veterans of current/former Reserve member or National Guard must have (activated Federal active service):
  • DD form 214
• Active Duty Servicemember
  Statement of service, which is signed by:
  • Adjutant
  • Personal office
  • Commander of the unit or higher headquarters
• National Guard members who have been a discharged member and have not been activated for Federal active service can qualify:
  • NGB Form 22
  • Report of separation
  • Record of service for each period
  • NGB Form 23
  • Retirement points accounting with proof of the character of service

Surviving Spouse Of Qualified Veterans Can Qualify For VA Loans

Under special circumstances, surviving spouses of qualified veterans can qualify for VA Loans:

• Surviving spouse in receipt of dependency
• Need indemnity compensation benefits:
  • VA form 26-1817 and veterans
  • DD214
• Not receiving dependency and indemnity compensation:
  • Need to submit Form 21p-534-ARE, DD214, marriage license, death certificate or DD form 1300
  • Mail to the appropriate PMC States

Gustan Cho Associates can assist borrowers with the above paperwork.

VA Qualification Guidelines On Lost Documentation And Help In Retrieving Proper Paperwork

Lost Documentation For VA Loan Eligibility Letter or Certificate of Eligibility can often be recovered by borrowers. Or contact us at Gustan Cho Associates Mortgage Group and one of our loan officers can assist borrowers to retrieve a lost Certificate of Eligibility (COE). In order to request military service records, borrowers can visit the National Archives website or contact us at Gustan Cho Associates.

Qualifying For VA Loans With A National Lender With No Overlays

Borrowers who need to qualify for VA Loan with a national lender with no overlays on government and conventional loans can contact us at Gustan Cho Associates at 262-715-8151 or text us for faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.