Gustan Cho The Mortgage Expert,
Publish On: November 3, 2022
In this blog, we will be covering the VA credit and DTI guidelines for VA home loans. Per VA Credit Score And DTI Guidelines, there are no minimum credit score requirements. Also, per VA Credit Score And DTI Guidelines, there are no maximum debt-to-income ratio requirements. As long as borrowers can get approve/eligible per the automated underwriting system, borrowers can qualify for VA Loans with a lender with no overlays.
Most lenders have overlays on VA Loans. Gustan Cho Associates is a mortgage company licensed in multiple states with no lender overlays on VA loans. As long as borrowers get an automated underwriting system approval and can meet the conditions of AUS, our borrowers will close their VA loans.
VA Credit Score And DTI Guidelines And Requirements
Here are the general VA Lending Guidelines:
- No down payment required
- 100% financing on VA Home Loans
- No monthly mortgage insurance required
- No minimum credit score with AUS Approval
- No maximum debt-to-income ratio requirements with AUS Approval
- Gustan Cho Associates recently closed a VA Loan for a borrower with 504 FICO and 64% debt-to-income-ratio
- Minimum credit score requirements are set by individual lenders as part of their overlay
- Maximum DTI caps are set by individual lenders as part of their overlays
- Gustan Cho Associates has zero overlays on VA Loans
There are no maximum loan limits on VA loans. There are 220 counties in the United States where VA loans are considered high-cost areas. The 220 counties are classified as high-cost areas that have higher home values than traditional areas.
Who Can Qualify For VA Loans
The United States Department of Veterans Affairs is the federal agency that insures and guarantees VA Loans originated and funded by lenders. VA is not a lender. It acts as a federal agency that partially insures loans to lenders who follow VA Guidelines on VA Loans. This is why private lenders can offer veterans with a VA certificate of eligibility (COE) 100% financing at great mortgage rates. COE is also known as DD214.
What Are The Service Requirements For a VA Loan?
To be eligible for VA loans, there are general service duty requirements mandated by VA. To be eligible for VA loans, you need to be active-duty and retired members of the U.S. Military with valid Certificate o.f Eligibility.
VA Debt To Income Ratio Guidelines Versus Lender Overlays
Many borrowers are often told by lenders that the debt-to-income ratio to qualify for VA Loans is 620 to 640. This is the particular lender’s requirements and not VA Guidelines. VA does not have any limits on debt-to-income ratios. Typically, lenders may limit DTI from 41% to 50%. Gustan Cho Associates has no lender overlays on VA Loans. We recently closed a borrower with a 65% debt-to-income ratio. The automated underwriting system will analyze the borrower’s overall credit and income profile and render an automated approval.
What Is The VA Funding Fee?
VA does not have an annual mortgage insurance premium.
VA Loans have VA Funding Fee which is similar to the upfront FHA Mortgage Insurance Premium. Below is the VA Funding Fee Chart for 2021:
VA Funding Fee Chart for 2021:
| Type of Veteran | Down Payment |
Percentage for First Time Use |
Percentage for Subsequent Use |
| Regular Military | 0% – 4.99% 5% – 9.99% 10% or more |
2.15% 1.50% 1.25% |
3.30% † 1.50% 1.25% |
| Reserves/National Guard |
0% – 4.99% 5% – 9.99% 10% or more |
2.40% 1.75% 1.50% |
3.30% † 1.75% 1.50% |
VA Fund Fee Refinance Chart on Rate and Term and Cash-Out Refinance
VA Funding Fee Refinance Chart On Rate/Term or Cash/Out
|
VA Funding Fee Refinance Chart on IRRRLs
VA Funding Fee Refinance Chart on IRRRL’S
| Type of Loan | The Percentage for Either Type of Veteran Whether First Time of Subsequent Use |
| Interest Rate Reduction Refinancing |
0.50% |
VA Credit Score And DTI Guidelines: Cash-Out Refinance
VA is the only loan program that allows homeowners to do a 90% loan-to-value cash-out refinance. Homeowners can use the cash-out proceeds for whatever need.
Refinance rates on cash-out refinance VA mortgages are higher than rate and term refinances. VA cash-out refinances are full credit/income mortgage loans. A new appraisal is required.
VA Interest Rate Reduction Refinance Loans
VA Interest Rate Reduction Refinance Loan also referred to as IRRRL, allows homeowners to refinance their current VA Loan into another VA Loan with lower rates. It is a streamlined mortgage process. No income documentation is required. No home appraisal is required. No late payments on their VA loan in the past 12 months.
To qualify for VA Loan with a mortgage lender licensed in 48 states, including Washington DC, Puerto Rico, and the U.S. Virgin Islands with no overlays, please contact 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 7 days a week, evenings, weekends, and holidays.
This blog on VA Credit Score and DTI Guidelines on Purchase and Refinance was updated and published on November 3rd, 2022.
