VA DTI And Credit Score Guidelines Versus Lender Overlays
In this article, we will cover and discuss VA DTI and credit score guidelines versus lender overlays. Gustan Cho Associates gets a lot of calls daily from borrowers who often are confused with VA DTI And Credit Score Guidelines. They contact us after being told by other lenders that they do not qualify for VA loans for one reason and/or another. For example, one lender may tell a borrower that the minimum VA credit score requirement is 640 while another says it is 620.
VA Agency Guidelines versus Overlays by Mortgage Lenders
They get the conflicting debt to income ratio requirement as well on VA Loans. Some lenders may say the Department of Veterans Affairs (The VA) has a maximum debt to income ratio requirement of 45%. Or other lenders may say the VA DTI requirement is 50% DTI. VA DTI And Credit Score Guidelines do not have a minimum credit score requirement or a maximum debt to income ratio requirement on VA Loans.
Lender Overlays Versus Agency Guidelines On VA Loans
The reason why lenders have different VA Lending Requirements is that they have their own lender overlays on VA loans. Lender overlays are mortgage guidelines that are above and beyond the minimum mortgage guidelines required by the Department of Veterans Affairs (The VA). For example, borrowers do not have to pay outstanding collections and/or charged-off accounts to qualify for VA loans per VA Agency Mortgage Guidelines.
VA Guidelines on Oustanding Collections and Charged-Off Accounts
Lenders may require borrowers to pay outstanding collections and charge off accounts even though VA Agency Guidelines do not require them to pay them off. This additional requirement of mandating borrowers to pay outstanding collections and charge off accounts by the individual lender is called a lender overlay by the particular lender.
VA Lender with No Lender Overlays
In this blog, we will cover VA DTI And Credit Score Guidelines versus lender overlays and qualifying for VA loans with a mortgage broker with wholesale lenders with no overlays. Gustan Cho Associates is a mortgage company licensed in 48 states with over 160 wholesale lenders. We have investors with no overlays on VA loans. We only go by VA Agency Guidelines and have no additional lender overlays on VA loans.
VA Agency Guidelines
A lender can have any type of overlays. Gustan Cho Associates is one of the very few mortgage companies licensed in multiple states with no lender overlays on government and conventional loans. We are also experts in manual underwriting of VA loans. We can go up to 65% on approve/eligible per AUS files and up to 55% on manual underwriting on VA loans.
Basic VA DTI and Credit Score Agency Mortgage Guidelines
Here are the general VA Agency Mortgage Guidelines:
- No minimum credit score is required with an automated underwriting system (AUS) approval
- No maximum debt to income ratio requirement with an AUS Approval
- Outstanding collections and/or charged-off accounts do not have to be satisfied unless the AUS conditions for it
- 2 year waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale
- Borrowers in a Chapter 13 Bankruptcy repayment plan can qualify during the repayment plan after 12 months into the plan with Trustee Approval and manual underwriting
- There is no waiting period after the Chapter 13 Bankruptcy discharged date to qualify for VA loans
- Any bankruptcy discharge that has been seasoned less than 2 years needs to be manually underwritten to qualify for VA loans
- Late payments in the past 12 months are allowed if the borrower gets an automated approval by AUS
In Conclusion To VA DTI and Credit Score Guidelines
The Department of Veterans Affairs (The VA) has very lenient credit and debt to income ratio guidelines. More so than any other loan program. There are no credit score requirements or debt to income ratio requirements on VA loans as long as borrowers can get automated approval by the automated underwriting system. For more information on this topic or other mortgage/real estate-related topics, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected] GCA Mortgage has no lender overlays on government and conventional loans. We have over a dozen non-QM wholesale lending relationships with alternative mortgage and non-QM wholesale lenders. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.