In this blog, we will cover and discuss the VA loan eligibility requirements in Vermont for 2022. We will cover the basic VA loan eligibility requirements in Vermont on credit, derogatory tradelines, bankruptcy, and other frequently asked questions by our viewers and borrowers. One of the biggest concerns among homebuyers in Vermont is the options homebuyers have after getting a VA loan denial due to low credit scores. The VA does not have a minimum credit score requirement on VA loans. The Department of Veterans Affairs also does not have a debt-to-income ratio requirements on VA loans. VA home loans have the most lenient mortgage guidelines than any other mortgage loan program.
Are All VA Lenders The Same in Vermont?
Unfortunately, many borrowers are under the assumption all VA-approved lenders are the same because a VA loan is a government-backed loan. This is not the case. All mortgage lenders need to meet the minimum VA eligibility requirements in Vermont for VA home loans. However, lenders can have additional higher lending requirements called lender overlays. Most lenders have overlays on VA loans. Why is it that many lenders using Veterans as part of their names are requiring 620 credit scores on VA loans when there is no minimum credit score requirements? Over 75% of our clients at Gustan Cho Associates are borrowers who could not qualify at other lenders. Just because you can’t qualify with one lender does not mean you won’t be able to qualify and get approved for a VA loan with a different lender.
How Do I Know A Lender Is A No Overlay Mortgage Lender?
Most lenders have lender overlays on VA loans. Just because you got denied by one lender does not mean you cannot qualify for a VA loan with another. Borrowers with bad credit should read this guide on VA loan eligibility requirements in Vermont so that if they get denied by a lender, they will know their rights. If they meet the minimum VA loan eligibility requirements in Vermont, they qualify for a VA loan. The borrower needs to make sure the lender they go with does not have lender overlays.
Getting VA Loan Approval After Getting Denied
Over 75% of our borrowers at Gustan Cho Associates are folks who could not qualify at other lenders due to last-minute loan denial, stress during the mortgage process, or due to lender overlays. For homebuyers with less than perfect credit, this guide on VA loan eligibility requirements in Vermont will be helpful. We structured the guide to be easy to navigate and understand the bullet points on the updated VA loan eligibility requirements in Vermont. We can help borrowers who got a VA loan denial due to low credit scores in Vermont.
What Is an Overlay on a VA Loans?
There are two types of VA Mortgage Guidelines:
- VA agency guidelines are determined by The U.S. Department Of Veterans Affairs
- VA Lender Overlays are additional VA guidelines that are above and beyond those of The U.S. Department Of Veterans Affairs
Most lenders will have lender overlays on VA loans. Gustan Cho Associates is one of the very few mortgage lenders with no overlays on VA Loans. We just go off VA agency guidelines. VA does not have any credit score requirements or debt to income ratio requirements. We are going to be comparing VA guidelines versus the guidelines of other loan programs and why you got a VA loan denial due to low credit scores in Vermont.
What Is The Lowest Credit Scores To Get VA Loan Approval
There are no minimum credit score requirements on VA loans. You can get a VA loan approval with credit scores down to a 500 FICO. The credit score requirements are up to the individual lenders. A lender can set a credit score minimum for their institution. Gustan Cho Associates has no lender overlays on VA loans. We just go off the minimum VA loan eligibility requirements in Vermont. VA loans are hands down the best mortgage loan programs in this country. VA loans offer 100% financing, no mortgage insurance premium, and low mortgage rates. There are no maximum loan limits on VA loans. However, only veterans with a Certificate Of Eligibility (COE) are eligible to qualify for VA loans.
What Is A VA Loan And How Does It Work?
The United States Department Of Veteran Affairs and our government offer VA loans to the members of our military and veterans as a benefit for serving our great country. The government realized that many veterans may not have the best credit in the world due to being deployed and may be late on their payments.
Can Any Mortgage Lender Do VA Loans With Bad Credit In Vermont?
Private lenders that are approved lenders by the Veterans Administration can do VA loans. The VA loan eligibility requirements on VA loans are fairly lenient. However, each lender can make a choice of not having lender overlays, having moderate to little lender overlays, or just not having lender overlays on VA loans. Many veterans who leave the military and enter the civilian workforce may have trouble getting jobs. Due to adjustment from military to civilian life, the likelihood of veterans having bad credit and lower credit scores are more likely than civilians. The probability of veterans filing bankruptcy and/or having a housing event (foreclosure/short sale/deed in lieu) may be more likely than for civilians. VA guidelines are more lenient than mortgage guidelines of other loan programs. Again, we will compare VA guidelines to FHA and conventional guidelines. You will see if you got a VA loan denial due to low credit scores in Vermont, you can be eligible to qualify for a VA loan with a lender with no overlays.
VA Loan Eligibility Requirements on Waiting Period After Bankruptcy and Foreclosure Versus Other Mortgages
Government and Conforming loans have a mandatory waiting period after housing events and bankruptcy. VA guidelines have the shortest waiting period after a housing event for borrowers qualifying for a mortgage:
- VA requires a two-year waiting period after Chapter 7 Bankruptcy and/or a housing event (foreclosure, deed in lieu, short sale)
- HUD, the parent of HUD, and USDA require a three year waiting period after the housing event
- FHA and VA require a two-year waiting period after the Chapter 7 Bankruptcy discharged date to qualify for a mortgage
- USDA requires a three-year waiting period after Chapter 7 Bankruptcy
- Fannie Mae and Freddie Mac require a four-year waiting period after Chapter 7 Bankruptcy, Deed In Lieu Of Foreclosure, Short Sale to qualify for Conventional Loans and a 7-year waiting period after standard foreclosure
- Both VA and FHA homebuyers can qualify for VA and FHA loans one year into a Chapter 13 Bankruptcy Repayment Plan with Trustee Approval
- There is a two-year waiting period to qualify for a conventional loan after the Chapter 13 Bankruptcy discharged date
- There is a four-year waiting period to qualify for Conventional loans after the Chapter 13 Bankruptcy dismissal date
From the mortgage guidelines above, one can see that VA guidelines have the shortest waiting period after housing events out of all other government and/or conventional loan programs.
VA Loan Eligibility Requirements in Vermont on Collection Accounts
Veteran Borrowers do not have to pay outstanding collections and charged-off accounts to qualify for VA loans with Gustan Cho Associates. Many VA Lenders may require borrowers to pay outstanding collections and charged-off accounts. However, VA loan eligibility requirements in Vermont do not require borrowers to pay outstanding collections and charged-off accounts. Lenders that require borrowers to pay outstanding collections and charged-off accounts are due to their mortgage lender overlays.
VA Loan Eligibility Requirements in Vermont on Student Loans
Any deferred student loans that have been deferred for longer than 12 months are exempt from debt to income ratio calculations on VA Loans. VA is the only loan program that exempts deferred student loans that have been deferred for more than 12 months. For veteran borrowers with outstanding student loans that are not deferred, here is how VA calculates student loan payments:
- Take 5% of the outstanding student loan balance and divide it by 12 months
- Use that figure as the monthly student loan payment
Can You Qualify For a VA Loan in Vermont With No Credit Scores?
All mortgage loan programs with the exception of VA loans have a minimum credit score and debt to income ratio requirements. VA does not have a minimum credit score requirement nor a maximum debt to income ratio cap. Why is it that most lenders require a 620 credit score or maximum 45% to 50% debt to income ratio requirement when VA Mortgage Guidelines do not require it? The reason being is that most mortgage lenders have lender overlays on VA Mortgages. Again, lender overlays are mortgage guidelines that are above and beyond those of VA Mortgage Guidelines. Gustan Cho Associates does not have any lender overlays.
What Are My Best Options for Finding a Lender After Being Denied by Another?
Gustan Cho Associates does not require any minimum credit score requirements on VA Loans. VA does not have any debt-to-income ratio requirements We do not have any debt-to-income ratio requirements on VA Home Loans. As long as veteran borrowers can have an approve/eligible per Automated Underwriting System Approval and they can satisfy all conditions on AUS, Gustan Cho Associates will approve and close the VA Loan. We close many veteran borrowers with over 60% debt to income ratios and credit scores under 600. A large percentage of our borrowers at Gustan Cho Associates are folks with 500 credit scores.
VA Loan Eligibility Requirements in Vermont Versus Other Mortgage Programs
There are instances where borrowers may not quite yet qualify for a VA loan in Vermont due to one of many potential reasons. Let’s just use an example the borrower had a recent bankruptcy and is in a hurry to buy a home but cannot meet the two-year waiting period after the discharge date to qualify for an FHA loan. The borrower will have options. Gustan Cho Associates are licensed mortgage brokers licensed in 48 states with over 170 wholesale mortgage lenders. The team at Gustan Cho Associates has multiple mortgage solutions to try to make the deal work. If the borrower cannot qualify for any of our mortgage programs. We will cover some of the other options the home buyer has.
How Do The Credit Qualification Standards For VA Home Loans Compare To FHA and Conventional Loans?
VA loans do not have a minimum credit score requirement to qualify. Per VA loan eligibility requirements in Vermont, as long the borrowers get an approval/eligible per automated underwriting system with credit scores down to 500 FICO, the borrower is solid.
Here are the minimum credit score requirements for other loan programs:
- 580 credit scores for FHA Loans with a 3.5% down payment
- Borrowers with 500 to 579 credit scores can qualify for FHA loans but HUD, the parent of FHA, requires a 10% down payment and AUS Approval
- Conventional Loans require 620 minimum credit scores
- Non-QM Loans and Non-Prime Bank Statement Loans for self-employed borrowers require 620 credit scores
- Lower scores are allowed on non-QM loans but more down payment is required
Veteran Borrowers who need to qualify with a mortgage company licensed in multiple states with no lender overlays on government and conventional loans can 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, on evenings, weekends, and holidays.
This article on VA Loan Eligibility Requirements in Vermont for 2022 Was Edited By Wendy Lahn, National Sales Manager at Gustan Cho Associates
