This BLOG On VA Loan With Recent Late Payments In The Past 12 Months Was PUBLISHED On November 19th, 2019
Borrowers can get an approve/eligible on VA Loan With Recent Late Payments in the past 12 months.
- One or two late payments in the past 12 months is not always a deal killer
- Late payments in the past 12 months are not viewed favorably by any lenders
- However, the automated underwriting system will evaluate borrower’s overall credit profile and history prior to rendering its automated findings
In this blog, we will discuss qualifying for VA Loan With Recent Late Payments in the past 12 months. We will also cover other options in the event borrowers cannot get an approve/eligible per AUS.
VA Loan With Recent Late Payments Versus Bad Credit
Borrowers can qualify for VA Mortgages With Bad Credit.
- Outstanding collections and charge off accounts do not have to be paid off to qualify for VA Loans
- However, being timely in the past 12 months on all payments is crucial in getting an approve/eligible per automated underwriting system (AUS)
- The Department of Veterans Affairs does not have any minimum credit score requirements or debt to income ratio requirements. Gustan Cho Associates at Loan Cabin Inc. has approved and closed VA borrowers with credit scores down to 500 and 60% PLUS DTI
- Lenders and the Department Of Veterans Affairs understand that people can go through tough times such as unemployment, medical issues, divorce, or other extenuating circumstances
However, the VA and lenders want to see that borrowers have recovered and re-established themselves. They want to make sure borrowers have the ability to repay their new housing mortgage payments.
Automated Underwriting System (AUS)
All mortgage applications need to go through Fannie Mae (DU) and/or Freddie Mac (LP) automated underwriting system (AUS)
- Just because a borrower has one or two late payments in the past 12 months does not mean that they will not get an automated approval
- However, it is difficult to get an AUS approval with multiple late payments in the past 12 months
- We do have other options for borrowers who cannot get an automated underwriting system approval
- VA allows manual underwriting
- However, with manual underwriting, borrowers need timely payments in the past 12 months
Again, one or two late payments in the past 12 months are not deal killers with manual underwriting. However, it needs to be due to extenuating circumstances such as medical and/or unemployment. Divorce is not an extenuating circumstance.
Options If Borrowers Cannot Get Automated Approval
Borrowers who cannot get an approve/eligible per automated underwriting system due to recent late payments in the past 12 months on VA Loans may want to see if they can get an automated approval on FHA.
- FHA is much more understanding with recent late payments than the VA is
- However, FHA Loans require 3.5% down payment
- VA Loans do not require any down payment and offer 100% financing
- Other options may be to qualify with NON-QM Loans
- Borrowers with recent late payments in the past 12 months can qualify for mortgages with non–qm loans
- However, 10% to 20% down payment is required on non-qm mortgages
- The amount of down payment depends on the borrowers’ credit scores
- Mortgage rates depend on the down payment and borrowers credit scores
- The final option to qualify for VA Loan With Recent Late Payments In The Past 12 Months is just to wait until the late payments season for 12 months
After the 12 months seasoning, the loan officer can rerun the automated underwriting system. Chances are that borrower will get an automated underwriting system approval.
Qualifying For VA Loan With Recent Late Payments In The Past 12 Months With A Direct Lender With No Overlays
Most lenders have mortgage overlays where even with an approve/eligible per AUS, they will not honor late payments in the past 12 months. Lender overlays are additional mortgage requirements that is above and beyond of the VA. Gustan Cho Associates at Loan Cabin Inc. are direct lenders with no overlays on VA Loans. Borrowers with late payments in the past 12 months can contact us at 262-716-8151 or text us for faster response. Or email us at email@example.com. Gustan Cho Associates Mortgage Group is available 7 days a week, evenings, weekends, and holidays.