VA Loans Bad Credit With No Mortgage Lender Overlays


This BLOG On VA Loans Bad Credit With No Mortgage Lender Overlays Was UPDATED And PUBLISHED On October 11th, 2020

VA Loans Bad Credit
Gustan Cho Associates

Borrowers who are members of the United States Armed Forces, including the National Guard, may qualify for VA Loans.

  • VA Loans allow veterans of the United States Armed Services to get a residential mortgage loan with no money down
  • Veterans get now qualify for a VA Loans with no money down with a maximum loan amount of $510,400
  • FHA loans, the maximum loan amount is $331,760 unless the subject property is located in a high cost area like many counties in California

In this article, we will cover and discuss qualifying for VA Loans With Bad Credit with a direct lender with no lender overlays.

FHA Versus VA Loans

Many Veterans who had a certificate of eligibility had a hard time getting VA Loans Bad Credit in the past and had to resort to FHA insured loans instead, where it requires a 3.5% down payment

  • VA Loans do not have a minimum credit score requirement nor do they have a maximum debt to income ratio cap
  • However, veteran borrowers need to get an approve/eligible per Automated Underwriting System Findings
  • VA loans were somewhat tougher to get an approve/eligible per DU or LP FINDINGS in recent years versus FHA Loans with borrowers with outstanding collections and charge offs
  • This is because of the no down payment requirement
  • However, VA loan programs have lightened up in recent months
  • FHA loans does not require that open collections be paid off
  • However,  Fannie Mae and/or Freddie Mac Automated Underwriting System Findings are tougher on outstanding collections and charge offs on VA versus FHA Loans
  • Many times, AUS will require that open collections and charge offs be paid off for VA loan programs on the Automated Underwriting System Findings but not FHA Loans
  • Those who had many outstanding unpaid open collections needed to resort to FHA loan programs when they got denied for VA loan programs via the automated underwriting system
  • This is due to open collections or other derogatory credit

After they close with FHA Loans, they can do a 100% cash-out refinance with a VA Loan at a later date.

Requirements And Guidelines On VA Loans

What are Requirements For VA Loans Bad Credit With Lender With No Overlays

As long as borrowers are a veteran and have the certificate of eligibility paperwork, veteran borrowers can qualify for a VA loan bad credit with no money down, 100% financing, no mortgage insurance premium.

  • There is a funding fee for VA loans Bad Credit which is similar like the FHA upfront mortgage insurance premium
  • The funding fee, normally 2% to 3%, can be rolled into the VA loan or paid with sellers concessions and/or lender credit
  • There are many case scenarios where a Veteran can purchase a home with no money down
  • Sellers concessions is allowed which can cover all closing costs as well as pre-paid which are property tax and insurance escrows
  • Department of Veteran Affairs allows up to 4% sellers concessions by sellers to cover veteran home buyers closing costs

Mortgage rates on VA loans are comparable to FHA loans.

Advantage Of VA Loans Over Other Government Loan Programs

No money down and 100% financing is the best advantage of VA loans. Gustan Cho Associates is a direct lender of VA Loans with no lender overlays.

  • Another major advantage of VA over FHA loans is that there is no monthly mortgage insurance premium
  • VA loan mortgage rates are hands down lower than any conventional mortgage loan programs
  • No mortgage insurance premium is a major plus
  • There is no funding fee for disabled veterans
  • The funding fee is waived
  • We can now approve VA loans for veterans with credit scores as low as 500
  • Open collections and other derogatory credit are dealt on a case by case basis
  • Manual underwriting VA loans is now allowed
  • For those Veterans who cannot get an approve/eligible per DU FINDING and/or LP FINDINGS can now request a manual underwriting on VA loans
  • Lenders do require timely payments for the past 12 months with AUS approval
  • Borrowers who are veterans with one or two late payments in the past 12 months, it is not a deal breaker

This only holds true as long as they get automated findings approval.

Qualify For VA Loans With A Lender With No Overlays

How Qualify For VA Loans With Bad Credit With Lender With No Overlays

Veteran Borrowers who cannot qualify by other VA Lenders due to their lender overlays, please contact us at Gustan Cho Associates. We are a national mortgage company with no overlays on VA Loans. Veteran Borrowers can qualify with us with under 620 credit scores. There are no minimum credit score requirements on VA loans. Please contact us at Gustan Cho Associates Mortgage Group at 262-716-8151 or text us for a faster response.  Or email us at We are available 7 days a week, evenings, weekends, and holidays.

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