VA Loans Ohio With Bad Credit And No Lender Overlays

Gustan Cho Associates are mortgage brokers licensed in 48 states

This Article Is About VA Loans Ohio With Bad Credit And No Lender Overlays

Ohio is one of the hottest states for homebuyers. This holds especially true for active and retired members of the United States Military. Ohio ranks as one of the highest population states of veterans. All areas of Ohio, especially the Columbus housing market, remain to be a very lucrative market for both owner-occupant homebuyers and real estate investors. Experts expect the Columbus area real estate market will skyrocket in 2022 and continue to remain strong in the years to come. Ohio attracts thousands of veterans annually due to the strong economy, great schools and universities, affordable housing, low property taxes, and low cost of living.

Veterans Buying Versus Renting Homes

Veterans Buying Versus Renting Homes

Many veterans are migrating to Ohio from higher-taxed states with the high costs of housing. Veterans migrating to Ohio prefer buying a home versus renting. VA loans is the best loan program in the nation due to no down payment required, no annual mortgage insurance, no minimum credit score, no maximum debt to income ratio, no minimum credit score requirements, and has the lowest mortgage rates than any other loan program.

The Booming Ohio Housing Market 

Data show that construction is increasing and cannot keep up with the demand for housing. Housing inventory will remain scarce throughout 2021 and into 2022. This holds true even with increased construction. High demand, low inventory, low taxes are the formula for rising home prices. Columbus, Ohio is the 14th largest city in the United States. The city is attracting much active duty and retired members of the United States Military. Most veterans migrating to Ohio are homebuyers. Veterans rather purchase a new home versus renting. Many veterans who rent when they move to Ohio eventually end up buying a home within a year.

Thousands Of Veterans Are Migrating To The State Of Ohio

Many veterans of our armed services see Ohio as their forever home and are migrating to this state in record numbers. Columbus, Ohio is one of the fastest-growing cities in the United States with a population of 9 plus million residents Many cities and counties in Ohio have seen explosive growth year after year since 2012. It is expected to get much higher. The major demand for homes that far exceed the inventory of housing is skyrocketing home prices. However, home prices in Ohio is still reasonable and affordable compared to other states in the nation.

In this blog, we will discuss qualifying for VA Loans Ohio with bad credit and no lender overlays. Gustan Cho Associates is one of the few direct national lenders with no overlays on VA Loans.

VA Loans Ohio Requirements And Guidelines

VA Loans is the best owner-occupant mortgage loan program any home buyer can have. Only active-duty retired, and/or eligible surviving spouses of eligible veterans can qualify for VA loans. Our government created and implemented VA Home Loans to reward our members of the United States Armed Services.

The Veterans Administration Is The Federal Government Agency Backing VA Loans

The Department of Veterans Affairs (The VA) is the government agency that sets mortgage guidelines. The VA is not a lender and has nothing to do with the origination, funding, or servicing of VA loans. The VA acts as a guarantor for private lenders who originate and fund VA loans. VA will partially insure and guarantee any losses due to defaulting borrowers due to foreclosure. Due to this government guarantee, lenders can offer our veterans VA loans with 100% financing and no down payment at very low mortgage rates.

VA Loan Mortgage Guidelines By The Veterans Administration Versus VA Loan Requirements By Mortgage Lenders

The Veterans Administration is the federal government agency that is in charge of the agency mortgage guidelines and the administration of VA loans. The Veterans Administration is not a lender. The VA does not originate, process, underwrite, or fund VA loans. Private lenders such as banks and mortgage companies who are VA-approved originate, process, underwrite, fund, or service VA mortgages. The role of the VA is to promote homeownership to active and retired members of the U.S. Military by insuring lenders in the event borrowers of VA loans default and/or foreclosure on their VA loans.

The Role Of Ohio VA Lenders Versus The Role Of The Veterans Administration

If a borrower defaults or forecloses on their VA loan, the VA will partially guarantee and cover the loss by the lender. Due to the government guarantee of the VA, lenders are aggressively originating VA loans with no down payment required, no mortgage insurance, at lower rates than conventional loans. All lenders need to meet the minimum agency VA lending guidelines by the VA. However, lenders can have higher lending standards than the minimum agency mortgage guidelines of the VA called lender overlays. Most lenders have lender overlays on VA loans. Gustan Cho Associates has no lender overlays on VA loans. We have zero lender overlays on VA mortgages. Gustan Cho Associates has closed thousands of VA loans with credit scores down to 500 FICO and debt to income ratios surpassing 60% DTI.

There are two separate types of VA Mortgage Guidelines:

  1. Agency Guidelines
  2. Lender Overlays

Typical Ohio VA Loan Requirements Required By Lenders

All lenders require their borrowers to meet minimum agency VA Guidelines. Most lenders will have additional VA Guidelines that are above and beyond the minimum VA Guidelines which are called lender overlays. It is perfectly legal for mortgage companies to have higher lending requirements than the minimum agency VA agency guidelines. Here are the typical lender overlays on VA loans:

  • Requiring higher credit scores when the VA does not have a minimum credit score requirement
  • Requiring a debt to income ratio cap when the VA does not have a debt to income ratio requirement
  • Not accepting manual underwriting on VA loans when the VA allow for manual underwriting on VA loans
  • Not allowing borrowers in an active Chapter 13 Bankruptcy qualify for VA loans when the VA allow borrowers in an active Chapter 13 repayment plan to qualify for a VA loan one year into Chapter 13 Bankruptcy repayment plan with trustee approval
  • Having waiting period requirements after Chapter 13 Bankruptcy discharged date when there is no waiting period requirement after Chapter 13 Bankruptcy discharged date
  • Not accepting outstanding collections and/or charged-off accounts when old outstanding collections and charged-off accounts do not have to be paid to qualify for VA mortgages
  • Requiring 3 traditional credit tradelines when tradelines is not a requirement

Again, it is beneficial for borrowers to fully understand the minimum agency VA guidelines. If you get denied from a lender on a VA loan, you will realize if you meet the minimum agency mortgage guidelines of the VA, you can qualify for a VA loan at a different lender with no lender overlays.

Ohio VA Mortgage Requirements Credit Scores

The Veterans Administration does not have a minimum credit score requirement on VA loans. For example, the VA does not have a minimum credit score requirement as long as the borrower can get an approve/eligible per automated underwriting system (AUS). A lender may require a 640 minimum credit score as part of their overlays. Gustan Cho Associates Mortgage Group recently had a borrower with a 545 FICO and 60% DTI get an approve/eligible per automated findings. We approved, processed, underwrote, and closed this VA Loan. Most lenders will have denied this borrower if they did not have a 640 FICO and a debt to income ratio less than 50% DTI.

Gustan Cho Associates is a mortgage company licensed in multiple states with no lender overlays on VA Loans Ohio. We only go off the findings of the automated underwriting system. The majority of our borrowers have credit scores under 600 FICO and debt to income ratios higher than 60% DTI.

Ohio VA Loan Guidelines And Requirements On VA Loans

VA Loans Ohio With Direct Lender With No Overlays

Here are typical VA Lender Overlays Imposed By Lenders:

  • Minimum credit score requirements: The VA does not mandate a minimum credit score requirement
  • Lenders requiring a 620 or higher credit score are lenders with their own higher lending requirements on VA loans
  • Maximum debt to income ratio cap: The VA does not have a maximum debt to income ratio requirement
  • Timely payments in the past 12 months are required for borrowers with low credit scores and high debt to income ratio
  • Pay off outstanding collections and charge off accounts
  • The VA does not require borrowers to pay outstanding collections and/or charged-off accounts

Ohio VA Loans On Manual Underwriting

Manual Underwriting: The VA allows manual underwriting on VA Loans. VA and FHA loans are the only two loan programs that allow manual underwriting on home loans.

VA Loans During Chapter 13 Bankruptcy Repayment Plan

VA Loan During Chapter 13 Bankruptcy Repayment Plan:

  • The VA allows borrowers to qualify during an active Chapter 13 Bankruptcy Repayment with Trustee Approval
  • Needs to be a manual underwrite
  • You need to be in the repayment plan for 12 months with timely payments
  • Chapter 13 Bankruptcy does not need to be discharged
  • The maximum debt to income ratio on manual underwriting is 40% front-end and 50% back-end with two compensating factors

VA Loan Requirements After Chapter 13 Bankruptcy Discharged Date

Waiting Period After Chapter 13 Bankruptcy discharged date:

  • There is no waiting period after a Chapter 13 Bankruptcy discharge date as long as it is manual underwriting
  • If the Chapter 13 Bankruptcy discharge has been seasoned for less than 24 months, it needs to be a manual underwrite
  • No late payments during the past two years and timely payments during the Chapter 13 Bankruptcy repayment plan

Qualifying For VA Loans With A Mortgage Company Licensed In Multiple States With No Lender Overlays

Over 75% of our borrowers at Gustan Cho Associates are folks who could not qualify for home loans at other lenders due to their overlays. Borrowers who need to qualify for VA, USDA, FHA, Conventional Loans with no lender overlays, please contact us at 262-716-8151 or text us for a faster response. Or email us at [email protected] We have a national reputation for our no-lender overlays business model. Gustan Cho Associates is known by many for being able to do loans other lenders cannot do. GCA Mortgage is a mortgage banker, correspondent lender, and mortgage broker. We have alternatives to government and conventional loans. Gustan Cho Associates has dozens of lending relationships with non-QM and specialty wholesale mortgage lenders.

Gustan Cho Associates is a mortgage company licensed in multiple states with no lender overlays on government and conventional loans. We are available 7 days a week, including evenings, weekends, and holidays.