Gustan Cho The Mortgage Expert,
Publish On: November 29, 2023
This guide covers the frequently asked question: do all lenders have the same guidelines on VA loans? One of the most common questions the team at Gustan Cho Associates gets daily is: Do all lenders have The same guidelines on VA loans? The simple answer to this question is no. Not all lenders have the same mortgage guidelines on VA loans. Many borrowers meet the minimum VA Agency Mortgage Guidelines. However, they are often turned down by lenders. Many get conflicting credit requirements on VA mortgages. Just because you get turned down by one lender does not mean you will not qualify at a different lender.
Agency Mortgage Guidelines Versus Lender Overlays
As mentioned earlier, not all lenders have the same VA guidelines on VA loans. All lenders must ensure their borrowers meet the minimum agency mortgage guidelines. However, most lenders have higher lending requirements on VA loans above and beyond the minimum VA agency guidelines. These higher lending requirements are called lender overlays.
Lenders can have lender overlays on just about anything and everything. Some borrowers are told the minimum credit score requirements are 640, while others are 680 FICO.
The same goes for debt-to-income ratios. Individual lenders may set their lender overlays above and beyond the VA. Gustan Cho Associates is one of the few national five-star mortgage companies with no lender overlays on VA mortgages. Gustan Cho Associates has zero overlays. We go off the automated underwriting system’s findings. This article will discuss and cover the question of do all lenders have the same guidelines on VA loans.
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Conflicting Answers on Do All Lenders Have The Same Guidelines on VA Loans
Some borrowers get conflicting debt-to-income ratio requirements from various lenders. Some are told the maximum debt-to-income ratio caps are 50%, while others are 45%. Under the VA agency mortgage guidelines, Chapter 13 repayment plan borrowers can qualify for VA loans. Chapter 13 Bankruptcy does not have to be discharged. However, many borrowers are told they do not qualify for VA loans during the Chapter 13 repayment plan.
The VA does not have any waiting period requirements after Chapter 13 Bankruptcy. Many borrowers are told there is a one- to two-year waiting period after the Chapter 13 bankruptcy discharge date.
Even though VA loans are insured and guaranteed by the federal government, not all lenders have the same requirements on VA loans. Borrowers must know the basic VA agency mortgage guidelines that the U.S. Veterans Administration sets. It is also very important for borrowers to understand the difference between VA agency guidelines and lender overlays by individual lenders.
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Understanding Overlays on VA Mortgages
All lenders need to have their borrowers meet the minimum VA agency mortgage guidelines. However, lenders can have higher lending requirements called lender overlays on VA loans. Just because you do not qualify with one particular lender does not mean you may not qualify at a different one. Lender overlays depend on the particular mortgage company.
Some lenders may have an overlay on collection accounts, but a different lender may not. Some lenders may have lender overlays requiring a 680 credit score on VA loans, while another lender may require a 620 credit score.
The VA has no maximum debt-to-income ratio requirement as long as the borrower gets approve/eligible. However, a lender may have DTI caps of 50%, while another may require 45% DTI caps. A lender can impose lender overlays on just about anything. The great news is that Gustan Cho Associates Mortgage Group has no lender overlays on VA loans. Gustan Cho Associates goes off on the automated findings of the automated underwriting system.
Do All Lenders Have The Same Guidelines on VA Loans: Agency Guidelines Vs. Overlays
You will qualify for a VA loan if you meet the minimum VA agency guidelines. This holds true even though one lender may say no due to their lender overlays. You need to find a lender with no lender overlays. Gustan Cho Associates has no lender overlays on VA mortgages. Many lenders have imposed stricter lender overlays due to the coronavirus pandemic and liquidity issues on the secondary mortgage bond market. However, Gustan Cho Associates has not imposed lender overlays during the coronavirus pandemic. Here are the minimum VA agency mortgage guidelines:
- 100% financing with no down payment required
- Gustan Cho Associates has no lender overlays on credit scores
- There is no minimum credit score requirement on VA loans as long as the borrower gets approve/eligible per the automated underwriting system
- There are no maximum debt-to-income ratio caps on VA loans with an approve/eligible per AUS
- Outstanding collections and charged-off accounts do not have to be paid
- Manual underwriting is allowed on VA mortgages
- There is a two-year waiting period after Chapter 7 Bankruptcy, foreclosure, deed in lieu of foreclosure, short-sale
- No closing costs with up to 4% sellers concessions
- No mortgage insurance required
- Borrowers in a current active Chapter 7 Bankruptcy repayment plan can qualify one year into the payment plan with Trustee approval.
- There is no waiting period after the Chapter 13 bankruptcy discharge date
- There is no maximum loan limit on VA loans
VA agency guidelines are very lenient. Mortgage rates on VA loans are the lowest of any other loan program. Again, Gustan Cho Associates has no lender overlays on VA mortgages.
Do All Lenders Have The Same Guidelines on VA Loans on Overlays?
Not all lenders have the same lender overlays. One lender may have an overlay on one item, and a different lender may not. Here are typical lender overlays on VA loans by mortgage companies. The VA does not have a minimum credit score, but a lender may require a minimum credit score requirement.
The VA does not have a maximum loan-to-value cap on VA loans. A lender may be required to pay outstanding collections and charged-off accounts when the VA does not require it.
Lenders may not accept manual underwriting when the VA allows it. Some lenders may require a minimum of 3 credit tradelines seasoned for the past 24 months as part of their lender overlays. Some lenders may not allow borrowers during the Chapter 13 bankruptcy repayment plan when the VA allows it.
Getting Qualified For a VA Loan With a Lender With No Overlays
Some lenders may require borrowers to wait one to two years after Chapter 13 bankruptcy discharge. The VA has no waiting period after the Chapter 13 discharge date.
Over 80% of our borrowers at Gustan Cho Associates Mortgage Group could not qualify at other lenders due to their lender overlays.
If you meet the minimum VA agency mortgage guidelines but are told you do not qualify due to lender overlays, please get in touch with 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 seven days a week, evenings, weekends, and holidays. The answer to do all lenders have the same guidelines on VA loans is no they do not.
