This BLOG On VA Loans Credit Score Requirements And DTI Guidelines Was PUBLISHED On August 28th, 2019
VA Home Loans are the best home loan program in the U.S.
- VA offers 100% financing with zero money down
- There is no mortgage insurance required on VA Loans
- Most homebuyers do not have to come up with a single penny
- VA allows 4% sellers concessions for sellers to contribute for homebuyers to cover for closing costs
- In the event buyers are short of closing costs due to shortage of sellers concessions, the lender can offer borrowers lender credit towards closing costs in lieu of slightly higher rate
In this article, we will cover and discuss VA Loans Credit Score Requirements And DTI Guidelines.
Key Benefits Of VA Mortgages
Sounds too good to be true? Wait!!! Not done yet. What are the VA Loans Credit Score Requirements? What is the maximum debt to income ratios on VA Mortgages?
- There are no minimum VA Loans Credit Score Requirements
- There is no debt to income ratio requirements on VA Home Mortgages.
If it sounds too good to be true then it normally is right? Everybody will flock to VA Loans to purchase a home with the following pros and no cons:
- Zero Down Payment with 100% Financing
- No closing costs
- Buyers can purchase a home with zero money out of pocket
- No private mortgage insurance on VA Loans
- No minimum credit scores per VA Loans Credit Score Requirements
- No maximum debt to income ratio requirements
Yes if it is too good to be true then it normally is. The catch is that ONLY Veterans who has served in the U.S. Armed Services and surviving spouses of veterans who died in the line of active duty with valid Certificate Of Eligibility (COE) are eligible for this AMAZING home loan program.
About The Department Of Veterans Affairs
The United States Department of Veterans Affairs (VA) is in charge of administering VA Home Loans.
- VA does not originate nor fund VA Loans
- Private lenders are the financial institutions that originate and fund VA Loans to eligible veterans of the U.S. Military
- VA insures and guarantees loans to private lenders who follow and meet VA Guidelines when funding VA Loans
- VA will insure lenders if their VA Loans go into default and protects lenders losses
- Due to this government guarantee, lenders can offer super low rates to eligible veterans with 100% financing and no mortgage insurance required
- VA Loans is one of the best benefits our government offers our veterans and active serviceman and women for their service in serving in one of the branches of our military
- VA Loans has one of the lowest mortgage rates out of any loan program out there
With 100% financing and no mortgage insurance, there is no other loan program in existence that can come close to VA Home Loans.
VA Loans Credit Score Requirements Per Agency Guidelines
There are certain FACTS Veterans Do Not Know about VA Agency Guidelines.
- Many veterans go from one lender to another are told different VA Loans Credit Score Requirements
- Some lenders tell them VA Loans Credit Score Requirements is 620 while others tell them they are 640
- Loan officers at these lenders do not tell them that the VA Loans Credit Score Requirements they give them are their own lender overlays and NOT agency guidelines
- All loan programs have minimum credit score requirements
- However, the Department of Veterans Affairs DOES NOT require minimum credit scores nor maximum debt to income ratios on VA Home Loans
- Gustan Cho Associates Mortgage Group is one of a very few national lenders that has zero overlays on VA Loans
- GCA Mortgage Group does not have any minimum credit score nor DTI requirements
- All that is required is an approve/eligible per Automated Underwriting System Findings
- There are countless veterans with credit scores in the 500’s and debt to income ratios at over 60% DTI we have approved and closed
- However, to get an approve/eligible per AUS
- veterans need to meet certain credit requirements like being timely on all of their payments in the past 12 months
We will discuss how to get an approve/eligible per AUS on this blog.
Are VA Lenders Different?
All lenders have different guidelines on VA Mortgages. Just because one lender says no does not mean another lender will not say yes.
- Over 75% of our borrowers at Gustan Cho Associates Mortgage Group are folks who could not qualify for mortgages at other lenders due to other lenders having their own lender overlays
- GCA Mortgage Group does NOT have any overlays on government and conventional loans
- By no overlays, we mean zero overlays
- I have worked at companies where I and my Team were promised and guaranteed no overlays on government and conventional loans
- VA does not have a credit score requirement
- When we started with the lender to start originating loans
- I brought many files to start processing with AUS Approval
- Processing/Underwriting stopped us and said we have no overlays but borrowers need to meet 620 credit scores
- Are you kidding me?
- We now have zero overlays and we just go off Automated Underwriting Approval FINDINGS
- The United States Department of Veterans Affairs does not have any VA Loans Credit Score Requirements
- I have closed countless loans with credit scores in the 500’s and 60% debt to income ratios
The credit scores required by lenders is not by VA but their own credit score requirements set by the individual lenders.
VA DTI Guidelines
A large percentage of our veterans come to us because they are told by other lenders that they do not qualify because their debt to income ratios are too high.
- Most lenders have overlays on debt to income ratios
- Many mortgage companies cap debt to income ratios at 41%, 45% 50%. WOW!!!
- Why is it that Gustan Cho Associates Mortgage Group can approve and close veterans with over 60% debt to income ratios?
- We are no rocket scientists nor have a cure for cancer
- The reason being is very simple
- Gustan Cho Associates Mortgage Group has no overlays. PERIOD
- Department of Veterans Affairs has no maximum debt to income ratio requirements
- Veterans with a lot of residual income can qualify for VA Loans with over 60% debt to income ratios
- Of course, it depends on AUS FINDINGS, but Automated Underwriting System FINDINGS will render an approval with higher debt to income ratios
- This holds true as long as veterans meet residual income requirements with under 600 credit scores
Main Factors For High Debt To Income Ratios
Two main factors why veterans have a higher debt to income ratios are due to car payments and high balance student loans. Nothing we can do with higher car payments. However, most lenders do not know agency guidelines like the team at GCA Mortgage Group does. Most loan officers take 1.0% of veterans outstanding student loan balance and use that as the monthly hypothetical debt when calculating veterans debt to income ratios.
VA Loan Process
Here is what GCA Mortgage Group goes by which are VA Guidelines:
- Deferred student loans that have been deferred for longer than 12 months are exempt from debt to income ratio calculations
- If student loans are not deferred, then mortgage underwriters take 5% of the outstanding student loan balance and divide that figure by 12 months
- The resulting figure is what underwriters use as a monthly hypothetical debt in DTI calculations
This figure normally turns out to be 0.50% more or less.
Choosing Lender With No Overlays On VA Mortgages
Not too many lenders have no overlays on VA Mortgages. GCA Mortgage Group is one of the very few national lenders in the U.S. with no overlays. By no overlays, we mean ZERO OVERLAYS. Loan Officers at Gustan Cho Associates closes on all of our pre-approvals. Not just close them but closes all of her borrowers on time or prior to the real estate purchase contract date. How? Very simple. All of our pre-approvals are full loan commitments to lend. Loan officers are not authorized to issue pre-approvals. Only pre-qualifications. All of our pre-approvals at GCA Mortgage Group are fully underwritten and signed off by our mortgage underwriters. The Team at Gustan Cho Associates Mortgage Group is available 7 days a week, evenings, weekends, and holidays. Feel free to contact us at Gustan Cho Associates or text her for faster response at 262-716-8151. Or email us at email@example.com.