Qualifying For A VA Loan With A Lender With No Lender Overlays

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This ARTICLE On Qualifying For A VA Loan With A Lender With No Lender Overlays Was PUBLISHED On January 14th, 2020

How to qualify for a VA loan with a lender without lender overlays

The U.S. DEPARTMENT OF VETERANS AFFAIRS provides benefits to those who served our country including funds for college and mortgage loans without a down payment.

  • This is one way of giving back to those who sacrificed so much to protect America’s freedom
  • Gustan Cho Associates are specialists in VA mortgage lending
  • There is a lot of contradicting information on the internet about VA mortgages
  • One of the most common misconceptions when it comes to VA mortgages is the fact you need a 620 credit score or higher to qualify
  • That is not the truth
  • In fact, the U.S. Department of Housing and Urban Development (HUD) does not have a minimum credit score requirement for VA mortgages
  • In this blog, we will detail how to prepare for a VA loan, how to apply for a VA mortgage with Gustan Cho Associates, and what do you expect during the process

We will also cover Qualifying For A VA Loan With A Lender With No Lender Overlays.

Preparing In Qualifying For A VA Loan

Preparing to apply for a VA loan should not be a scary task. Unfortunately, there is so much false information published online surrounding VA loans. This can put a bad taste in a potential borrower’s mouth. In this article, we will detail how to successfully prepare to purchase a home with a VA mortgage with Gustan Cho Associates.

Factors That Affect Hurdles In Qualifying For A VA Loan

There are a few basic items to address before applying for a VA mortgage. Credit history and assets are the most important pieces of the puzzle.

  • As mentioned above, there is not a minimum credit score requirement for a VA loan, but your payment history is analyzed for qualification purposes
  • Also, a down payment is not needed but you still need assets to complete the transaction

These assets are used for closing costs and reserves.

Credit history:

  • It is important to understand that a credit score and credit history are two separate things
  • We are not worried about your true credit score, as there is not a minimum credit score requirement
  • However, we do need to analyze your credit history
  • Most importantly, your payment history
  • A VA underwriter will examine the past 12 months of your payment history with a fine-tooth comb
  • Assuming you have zero late payments and zero non-medical collections in the past 12 months, typically you do qualify for a VA mortgage
  • Many lenders will tell you a 620 or even a 640 credit score is required to complete a VA mortgage

That is not true. Payment history is key for qualifying for a VA loan.

Late Payments In The Past 12 Months

Which means late payments in the last 12 months

If you do have late payments in the past 12 months, it does not mean your file will be denied.

  • However, you do need a detailed letter of explanation for why you were late
  • Assuming your letter of explanation is accepted by the underwriter, the late payments can be allowed
  • The letter of explanation will typically need to show a reason why you were unable to make the payment
  • Such as an extended hospital stay or being stationed overseas for military purposes
  • If we can document the hospital stay, typically an underwriter will allow that late payment within the past 12 months

Documentation will be required to support your letter of explanation.

Qualifying For A VA Loan And Asset Requirements

Assets:

Just because a VA mortgage does not require a down payment, does not mean you need $0 to purchase a property.

  • You will still have closing costs and at times a RESERVE REQUIREMENT to meet
  • Usually, an underwriter likes to see at least one month of mortgage payment in your bank account after closing costs are paid
  • Closing costs can be paid for by the seller
  • On a VA mortgage, you may ask the seller to contribute up to 4% of the purchase price to help pay for closing costs
  • This is called seller credit for a seller concession
  • If you are not able to get seller credits, you are responsible for the closing costs

Closing costs on a VA mortgage include lender origination, escrows (taxes and insurance), title work, and any local call such as transfer stamps.

Applying And Qualifying For A VA Loan With A No Overlay Lender

How to apply for a VA mortgage?

Applying for a VA mortgage with Gustan Cho Associates is very simple. First, you want to gather the following documentation:

  • Last 60 Days Bank Statements – to source money for escrows and reserves
  • Last 30 Days Pay Stubs
  • Last Two Years W2’S
  • Last Two Years Tax Returns – only needed for NON-W2 income reported to IRS
  • Driver’s License
  • Certificate of Eligibility 

After you have this documentation, please contact Mike Gracz on 630-659-7644 or mgracz@gustancho.com. Mike will have a one-on-one mortgage consultation with you. During this call, you will go over basic qualifications. The next step will be an application. A licensed loan officer will send you an application link for the state in which the property is located. Once completed, that gives us permission to verify your credit report and start your pre-approval based on the documentation you sent in.

VA Mortgage Process

How long does the VA mortgage process take?

What to expect during the process?

  • The pre-approval process can be confusing
  • Especially if you are using an inexperienced loan officer
  • Once we have verified your credit report and you sent in the required documentation, your licensed loan officer will either issue you a pre-approval letter or a detailed financial plan to qualify as soon as possible
  • If there are any potential hurdles for qualifying, we have the ability to send your file to our underwriting department before you select a home
  • This will ensure you do not waste money on inspections and appraisals just to learn you do not qualify

For more on this process please see our blog on our TBD UNDERWRITING PROCESS. This is an amazing tool we have at our disposal for more complicated loan scenarios.

About Us At Gustan Cho Associates

Gustan Cho Associates pride themselves on customer service. We have the utmost respect for our nation’s veterans. We will do all we can do to help a Veteran achieve homeownership! We have numerous loan programs available for our veterans such as HOMES FOR HEROES as well as VA RENOVATION LOAN. You can borrow up to $50,000 above and beyond the purchase price for acceptable repairs. We encourage you to reach out to us even if you have been turned down by another lender. 75% of our clients have been turned down or are not getting the customer service they deserve from their current lender. Please note, we do not have any additional lender overlays to get in the way of your qualifications. We are available seven days a week even on holidays. For any general questions please contact Mike on 630-659-7644. We look forward to hearing from you. Check out our YouTube CHANNEL for updates to Gustan Cho Associates.

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