VA AUS Approval

VA AUS Approval With Low Credit Scores and High DTI

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this article, we will discuss VA AUS approval versus manual underwriting on VA loans. VA loans are the best loan program for owner-occupant home buyers. The Department of Veterans Affairs, The VA, is the government agency that insures VA Loans to private lenders who originate and fund VA loans. The Veterans Administration does not originate nor fund VA loans.

Who Originates and Qualifies VA Loans?

VA Mortgages are originated and funded by private VA-Approved Lenders. In the event borrowers default their VA loans and the property goes into foreclosure, the VA will partially guarantee the loss the lender sustains. Due to this government guarantee by The VA, lenders can offer 100% financing at very low rates on VA loans. In this blog, we will discuss VA  AUS Approval Versus Manual Underwriting on VA loans.

VA Guidelines And Getting VA AUS Approval

YouTube player

The Automated Underwriting System (AUS) is a sophisticated automated system that analyzes the specific agency mortgage guidelines within a matter of seconds and renders an automated decision. The three decisions the automated underwriting system (AUS) will render the following decisions. Borrowers who meet all agency mortgage guidelines will get an approve/eligible per AUS. Refer/Eligible means the automated underwriting system cannot render an automated underwriting system approval but the file is eligible for manual underwriting. Refer with caution means the borrower does not qualify. Getting VA AUS Approval is key. Lenders who get VA AUS Approval can get their VA Loans processed and closed if they can meet the conditions rendered by the automated underwriting system. The AUS has the algorithms of VA Mortgage Guidelines.

Eligibility Requirements On VA Home Loans To Get VA AUS Approval

Here are the basic VA Mortgage Guidelines. Borrowers who meet the following VA eligibility requirements should get an automated underwriting system (AUS) approval. The 100% financing means no down payment is required on VA Loans. The VA does not have a minimum credit score requirement. Borrowers with 500 FICO can get a VA AUS Approval. The VA does not have a maximum debt to income ratio requirement if the borrower has a residual income. Outstanding collections and charge-off accounts do not have to be paid off to get a VA AUS Approval.

Timely Payments in the Past 12 Months is Key in Getting AUS Approval

Timely payments in the past 12 months in getting an automated underwriting system approval. There are no credit tradeline requirements but credit tradelines are positive in getting AUS approval. Reserves and down payments are considered compensating factors for manual underwriting and/or borrowers with lower credit scores. The 2-year waiting period after Chapter 7 Bankruptcy discharged date, foreclosure, deed in lieu of foreclosure, short-sale. The VA understands that many active and retired veterans of the armed services may have lower credit profiles than their civilian counterparts. Soldiers may have difficulty paying their bills timely when they are deployed overseas. Gustan Cho Associates have gotten countless of VA AUS Approval of borrowers with credit scores in the 500 FICO and debt to income ratios over 60% DTI.

Lender Overlays Versus VA Agency Guidelines

Lender Overlays Versus VA Agency Guidelines

Gustan Cho Associates is a mortgage company licensed in multiple states with no lender overlays on VA loans. As long as the borrower gets a VA AUS Approval and they can meet the conditions of the AUS, then the loan will close. However, not all lenders are like Gustan Cho Associates. Most lenders have overlays on VA Loans. What lender overlays are mortgage guidelines that are above and beyond VA Lending Guidelines. For example, the VA does not have a minimum credit score requirement.

Lender Overlays on VA Loans

Most lenders will require a 620 credit score. The 620 credit score requirement is a lender overlay by the particular lender. The VA does not have a maximum credit score requirement. However, it is typical for a lender to have a 45% to 50% DTI requirement as part of their lender overlays. The bottom line is many lenders will require additional lending requirements on VA loans even though the borrower has a VA AUS Approval. Gustan Cho Associates has no lender overlays on government and conventional loans.

Manual Underwriting Guidelines On VA Loans

VA and FHA Loans are the only two loan programs that allow manual underwriting. If a borrower gets a refer/eligible per automated underwriting system (AUS), the file can be manually underwritten. VA Manual Underwriting Guidelines state the following:

  • Meet all VA Mortgage Guidelines.
  • Timely payments in the past 12 months.
  • Borrowers who are in a current Chapter 13 Bankruptcy Repayment Plan can qualify for VA Loans via manual underwriting with Trustee Approval.
  • There are no waiting period requirements after the Chapter 13 Bankruptcy discharged date.
  • Any bankruptcy discharge that has not been seasoned for at least 2 years needs to be manually underwritten.
  • Maximum debt to income ratio requirement with no compensating factors on manual underwriting is 31% front end DTI and 43% back end DTI.
  • Maximum DTI with one compensating factor is 37% DTI front end and 47% DTI back end.
  • The maximum debt to income ratio with two compensating factors is 40% DTI front end and 50% DTI back end.

Please Read This Blog On VA Compensating Factors On Manual Underwriting

Starting The Mortgage Process With An Experienced Mortgage Loan Officer

One or two recent late payments are not a deal killer if borrowers have extenuating circumstances. For more information in qualifying for VA VA loans with bad credit or manual underwriting, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

Similar Posts


  1. The Lenders in my area, Orange County, CA., have lending limit overlays on the home value with the VA Guaranteed Home Loan program, usually 1.5M. However, many Borrowers would like to use their VA benefit to purchase a 2-5M home. They have excellent credit, and jobs, and the additional 25% for the guaranty.

    You’re stating you have no overlays for VA Home Loans, so I’m assuming you can fund my Client’s purchase for 5M. Is that accurate? Their credit is optimal, they have the $1,068,368.75 down payment, and income to qualify.

    Please advise – “Thank You”

    1. We have no lender overlays on VA Loans. VA just recently removed the maximum VA Loan Cap on VA Loans. As long as the borrower can get an approve/eligible per automated underwriting system and the borrower can meet the conditions, we will close the loan. Feel free to email me at or call or text me at 262-716-8151.

Leave a Reply

Your email address will not be published. Required fields are marked *