Do All Lenders Have the Same Guidelines on VA Loans?
One of the most frustrating experiences for VA homebuyers is getting different answers from different lenders. You may meet the official VA loan guidelines, but some lenders still tell you no—while others say yes to the exact same loan scenario. Why? Because not all lenders follow the same rules.
So, do all lenders have the same guidelines on VA loans? The short answer is no. While the Department of Veterans Affairs (VA) sets the basic rules, individual lenders add their own requirements called lender overlays—extra regulations beyond VA guidelines. That’s why you might qualify with one lender but not another.
In this guide, we’ll explain why lender guidelines vary, how to find a lender without overlays, and what to do if you’ve been turned down for a VA loan. If you’re ready to get approved fast with no lender overlays, Gustan Cho Associates can help.
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.
Agency Guidelines are the official rules set by FHA, VA, USDA, Fannie Mae, and Freddie Mac
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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.
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.
No Extra Restrictions on Late Payments or Collections
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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.
Frequently Asked Questions About Do All Lenders have the Same Guidelines on VA Loans:
Q: Do All Lenders have the Same Guidelines on VA Loans?
A: No, not all lenders have the same guidelines on VA loans. The VA sets basic rules, but individual lenders can add extra requirements, called lender overlays, which may affect your approval chances.
Q: What are Lender Overlays, and How do They Affect My VA Loan Approval?
A: Lender overlays are extra rules that some lenders require beyond the official VA guidelines. These could include higher credit score minimums, lower debt-to-income ratio limits, or additional requirements for past bankruptcies or collections.
Q: What are the Basic Steps in Getting Mortgage Approval for a VA Loan?
A: The steps in getting mortgage approval for a VA loan include:
- Checking your eligibility (military service requirements)
- Getting a Certificate of Eligibility (COE) from the VA
- Finding a VA-approved lender (preferably with no overlays)
- Getting pre-approved by submitting income, credit, and asset documents
- Finding a home and making an offer
- Completing the VA appraisal and underwriting process
- Closing on your home and getting the keys!
Q: Why did One Lender Deny My VA Loan, But Another Approved it?
A: Different lenders have distinct overlays, meaning that one lender may require a higher credit score or a lower debt-to-income ratio than another. A different lender (without overlays) could still approve your loan if you satisfy the VA’s official criteria.
Q: Can I Get a VA Loan with a Low Credit Score?
A: Absolutely! The VA does not set a minimum credit score standard. Nevertheless, numerous lenders enforce additional criteria, often requiring 620, 640, or even 680 scores. At Gustan Cho Associates, we follow VA standards without adding additional requirements, allowing credit scores as low as 500 to qualify with AUS approval.
Q: Does the VA have a Maximum Debt-to-Income (DTI) Ratio?
A: No, the VA does not set a maximum DTI ratio. As long as the automated underwriting system (AUS) approves your loan, you can qualify. However, many lenders add overlays and set limits at 45% or 50% DTI.
Q: Can I Get a VA Loan in a Chapter 13 Bankruptcy Repayment Plan?
A: Yes! The VA allows borrowers in an active Chapter 13 repayment plan to qualify for a loan after 12 on-time payments with trustee approval. However, some lenders do not allow this, so finding a lender without overlays is key.
Q: Do VA Loans Require Mortgage Insurance (PMI)?
A: No, VA loans do not require monthly private mortgage insurance (PMI)—which helps lower your monthly payment compared to FHA and conventional loans.
Q: What if I was Denied a VA Loan? What Should I do Next?
A: If you were denied, follow these steps:
- Ask the lender why you were denied.
- Check if the reason is an overlay (extra rule) and compare it to VA guidelines.
- Find a lender with no overlays, like Gustan Cho Associates.
- Improve your credit or financial profile if needed and reapply.
Q: How Can I Find a Lender with No Overlays for My VA Loan?
A: Look for a lender that:
- Approves VA loans based only on VA guidelines
- Does not add extra credit score or DTI requirements
- Allows manual underwriting for non-traditional borrowers
- Closes loans quickly and efficiently
At Gustan Cho Associates, we have no lender overlays and approve VA loans based strictly on VA guidelines—helping you get approved when others say no.
Looking for assistance with your VA loan approval? Call 800-900-8569, text us for a quicker reply, or email gcho@gustancho.com now!
This blog about “Do All Lenders Have The Same Guidelines on VA Loans” was updated on March 20th, 2025.
