VA Home Mortgage With 500 FICO Lending Guidelines

. This Article Is About VA Home Mortgage With 500 FICO Lending Guidelines

Is It True VA Loans Have No Minimum Credit Score Requirements And If So,

Why Do Lenders Have Minimum Credit Score Requirements?

This is because most lenders have lender overlays on VA loans. In this article, we will cover the following topics:

  • VA agency guidelines versus lender overlays.
  • Qualifying for VA loans with credit scores as low as 500 FICO.
  • The importance of timely payment in the past 12 months.
  • Why Gustan Cho Associates approve VA loans when other lenders cannot.

Over 75% of borrowers at Gustan Cho Associates are folks who have been denied at other lenders. We will show you how we approve borrowers other lenders deny in this article.

Prequalify for a mortgage in just five minutes. 

No Minimum Credit Score Requirement on VA Loans

It is true that there are no minimum credit score requirements on VA loans as long as the borrower can get an approve/eligible per automated underwriting system (AUS). There are no maximum debt to income ratio on VA loans as long as the borrower can get an approve/eligible per automated underwriting system.

The key in getting an approve/eligible per automated underwriting system is to make sure the borrower has been timely in the past 12 months on all of their payments. Gustan Cho Associates are experts in manual underwriting. A large percentage of our borrowers at Gustan Cho Associates are borrowers who need a manual underwrite.

What Are Lender Overlays Versus Agency Mortgage Guidelines

The key to getting an approve/eligible per automated underwriting system for borrowers with high debt-to-income ratio is for the borrower to have high residual income.

Residual income is key on VA loans with high debt to income ratio. The reason why lenders have certain credit score requirements and/or debt to income ratio caps is that most lenders have lender overlays on VA loans.

What Are Lender Overlays

Lender overlays are lending requirements and guidelines that are above and beyond the minimum VA Agency Mortgage Guidelines. Gustan Cho Associates has no lender overlays on VA loans. As long as the borrower can get an approve/eligible per the automated underwriting system, Gustan Cho Associates will approve and close the loan.

Over 75% of our borrowers are folks who could not qualify for a mortgage at other lenders due to lender overlays. Since we have no lender overlays, we just go by the minimum agency VA mortgage guidelines with zero lender overlays.

Who Is Eligible For VA Loans

VA Loans is the best owner-occupant residential mortgage program in the U.S. However, borrowers need to be either active or retired members of the U.S. Military with a valid Certificate of Eligibility. Certificate of Eligibility is also referred to as COE.

The U.S. Department of Veterans Affairs is the government agency that is in charge of the VA Home Mortgage Guarantee Programs. Lenders can offer 100% financing with interest rates lower than conventional loans to VA borrowers.

This is due to the partial loan guarantee by the Department of Veterans Affairs. Gustan Cho Associates are direct lenders with no overlays on VA Mortgages.

Lender Overlays Versus Agency Mortgage Guidelines

What Are Lender Overlays Versus Agency Mortgage Guidelines

Over 75% of our borrowers at Gustan Cho Associates are folks who come to us due to last-minute mortgage denial or stress during their mortgage process. Gustan Cho Associates is a five-star mortgage company licensed in multiple states with no lender overlays on VA Loans. Overlays are lending requirements that are above and beyond those of VA Guidelines.

For example, VA does not require a minimum credit score requirement. However, most lenders have minimum credit score requirements of 620 to 640. This minimum credit score requirement by lenders is called lender overlays. Gustan Cho Associates has no minimum credit score requirements. Borrowers can qualify for VA Home Mortgage with no credit score requirements at Gustan Cho Associates. 

Qualifying For VA Home Mortgage With 500 FICO

Many borrowers are often confused about the minimum credit scores required on VA Loans. They often consult with lenders about qualifying for VA Loan With 500 FICO. However, they are often told they need a 620 or 640 credit score. Borrowers do need an approve/eligible per automated underwriting system findings to qualify for VA Mortgage With 500 FICO. They often are surprised when they contact us that they can qualify for VA Home Loan With 500 FICO.

How Strict Is It To Qualify For VA Home Mortgage With 500 FICO

VA Loans are one of the easiest loan programs to qualify for. VA Home Loans was created and launched in 1944 by the Department of Veterans Affairs.  The purpose of the creation of VA loans was to reward and help our men and women of the U.S. Armed Services to purchase homes after they got back from World War II. VA has helped many million soldiers buy and finance their home loans.

Besides offering 100% financing, the Department of Veterans Affairs realized that soldiers did not have good credit while being deployed versus their civilian counterparts. It is difficult to pay your bills on time while being deployed to serve your country overseas.

The agency created much lax underwriting guidelines than other loan programs. To qualify for VA Loans after foreclosure, short sale, deed in lieu of foreclosure has a two-year waiting period versus FHA’s three-year waiting period.

VA does not have a minimum credit score requirement where FHA requires 580 credit scores. VA does not have a maximum debt to income ratio requirement when other loan programs do. Unfortunately, most lenders do not offer VA Home Mortgage With 500 FICO.

The great news is that Gustan Cho Associates offers VA Home Mortgage With 500 FICO as long as borrowers can get an automated underwriting system approval.

Automated Underwriting System And Key Getting An AUS Approval

The Automated Underwriting System is a sophisticated automated system that renders a decision within seconds.  Borrowers can qualify for VA Home Mortgage With 500 FICO but need an AUS Approval.

Automated Underwriting System will analyze the following prior to rendering its decision:

  • Credit Scores
  • Overall Payment History
  • Late payments 
  • Late payments in the past 12 months
  • Available credit on revolving credit accounts
  • Down payment, if any
  • Reserves if any
  • Residual Income
  • Credit inquiries

The AUS determines the VA Guidelines within seconds and render an approve/eligible per automated underwriting system if the borrowers meets the agency guidelines.

VA Home Mortgage With 500 FICO Process

Is a VA Home mortgage with a 500 FICO process possible

The way our system at Gustan Cho Associates works is we just go off by automated underwriting system findings. We do not have any overlays. This holds true as long as borrowers get an approve/eligible per AUS. The borrowers need to meet the conditions.

As long as the borrowers can meet the conditions of the AUS, they can close on the VA Home Mortgage With 500 FICO. 

Example Of Conditions

Examples of conditions may be the following:

  • Requiring verification of employment
  • Conditioning verification of rent when AUS does not require it
  • Certificate of Eligibility
  • 2 years tax returns and W2s
  • And other documents

Borrowers who get a refer/eligible from the automated underwriting system, lenders can downgrade the file to manual underwriting. VA and FHA allow for manual underwriting.

Borrowers who need to qualify for VA Home Mortgage With 500 FICO, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected] The Team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

Gustan  Cho Associates has no lender overlays on government and conventional loans. We just go off the automated findings of the automated underwriting system.

Get a custom VA mortgage quote now. 

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