fbpx

VA Loan Denial Due To Overlays And Qualifying With Different Lender

0

VA Loan Denial Due To Overlays And Qualifying With Different Lender

This BLOG On VA Loan Denial Due To Overlays And Qualifying With Different Lender Was PUBLISHED On April 13th, 2019

For borrowers who get a VA Loan Denial Due To Overlays can look for a lender with no overlays on VA Loans.

  • Most borrowers who get denied for VA Loan Denial Due To Overlays may not qualify with that lender but may meet all VA Guidelines
  • They may qualify for a VA Loan with a direct lender with no overlays on VA Loans if they get denied for VA Loan Denial Due To Overlays
  • Not all lenders have the same VA Mortgage Guidelines
  • All lenders will require borrowers to meet the minimum VA Guidelines
  • However, lenders may require higher credit/income standards that are above and beyond the minimum VA agency guidelines
  • This is why not all lenders have the same VA lending requirements
  • Gustan Cho Associates at Loan Cabin Inc. are direct lenders with no overlays on government and conventional loans
  • Over 75% of our borrowers are folks who could not qualify at other lenders due to their mortgage overlays

In this blog, we will discuss VA Loan Denial Due To Overlays and qualifying for a  VA Loans with a direct lender with no mortgage overlays.

VA Automated Underwriting System Versus Lender Overlays

All lenders will enter the borrower’s file to Fannie Mae and/or Freddie Mac’s Automated Underwriting System (AUS) for automated underwriting approval. The AUS will render the following decisions of the borrower within a matter of seconds of analyzing borrower’s credit, income, assets, FICO, payment history, public records, and other information on the borrower’s 1003 and credit report:

  1. approve/eligible per AUS
  2. refer/eligible per AUS
  3. refer/with caution per AUS

Automated Findings

If the borrower gets an approve/eligible per AUS, that means they fully meet all VA guidelines.

  • Gustan Cho Associates has no overlays on VA Loans so we just go off by the AUS FINDINGS and have ZERO OVERLAYS
  • However, most lenders will not just go off the AUS FINDINGS, but they will have their separate individual additional VA lending requirements called lender overlays
  • VA Loan Denial Due To Overlays is mainly due to the lender’s individual overlays
  • Most borrowers who get VA Loan Denial Due To Overlays qualify for a VA Loan with a different lender with no overlay

Refer/Eligible means that the Automated Underwriting System cannot determine an automated approval and the file needs a human mortgage underwriter for further review (manual underwriting). Refer/with caution means that the borrower does not qualify for a VA Loan.

Examples Of Typical Overlays

It will be impossible covering all the lender overlays in this blog. However, we will touch on common lender overlays.

  • The Department of Veterans Affairs does not have any minimum credit score requirements
  • VA made it possible for our active and retired members of our U.S. Armed Forces to qualify for VA Loans with very lenient credit/income requirements
  • However, many lenders may require a 620 to 640 FICO credit score even though VA does not have a minimum credit score requirement
  • The VA also does not have a maximum debt to income ratio requirements
  • However, most lenders will cap VA DTI to 41% to 50%
  • Gustan Cho Associates at Loan Cabin Inc. has closed countless of VA Loans with over 60% DTI and credit scores under 600 FICO
  • Another common overlays by lenders is they require outstanding collections and charge off accounts to be paid

The Department of Veterans Affairs does not require borrowers to pay outstanding and/or charge off accounts to qualify for VA Loans.

Qualifying For VA Loan With A Direct Lender With No Overlays

Borrowers with a recent VA Loan Denial Due To Overlays can contact us at Gustan Cho Associates at Loan Cabin Inc. at 262-716-8151 or text us for a faster response. Or email us at gcho@loancabin.com. We are direct lenders with no overlays on VA Loans. We have zero overlays and just go off automated findings of AUS. We are available 7 days a week, evenings, weekends, and holidays.

Leave A Reply

Your email address will not be published.

CALL NOW