VA Loans With Bad Credit New Lender Options After Denial

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this article, we will discuss and cover the steps to take after getting denied by a lender for VA loans with bad credit. Not all lenders have the same VA lending requirements. Most lenders have overlays on VA loans. For example, the Veterans Administration does not have a minimum credit score requirement. It is not uncommon for a lender to require a 620 credit score or higher. Over 10% of our borrowers at Gustan Cho Associates have credit scores under 600 and down to 500. 

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About VA Loans for Active/Retired Members of the Military

Active duty and/or retired veterans with a valid COE can qualify for VA loans with bad credit and credit scores as low as 500 FICO. With higher home prices due to the housing boom, VA loans do not have a maximum loan limit.  A large percentage of our military veterans migrate to warmer climate states due to affordable cost of living, lower taxes, great job opportunities, and more importantly, reasonable home prices. Unlike Florida, Texas, Georgia, California, Arizona, Colorado, California, Michigan, Indiana, Kentucky, New Jersey, Pennsylvania, and Ohio, the values of certain Southern and Midwestern states have not skyrocketed. 

Eligibility Requirements For VA Loans with Bad Credit

Veteran home buyers with a Certificate Of Eligibility can now qualify for VA Loans With Bad Credit. VA Loans are hands down the easiest and best home loan program in this country. Many borrowers who contact me say that their mortgage lender can approve them for FHA Loans but not for a VA Loan. Why is that?

Comparing FHA Versus VA Loans With Bad Credit

Here are the reasons why other lenders cannot qualify them with VA Loans with Bad Credit but can qualify them for FHA Loans With Bad Credit:

  • The United States Department of Veteran Affairs, or VA, does not have a minimum credit score or debt to income ratio requirements
  • Most lenders will have VA Lender Overlays that are higher than FHA Lender Overlays
  • Most Lenders will have a 640 Credit Score Requirement
  • Others may have a 620 score Requirement

VA Loans With Bad Credit New Lender Options After Denial: Consult With VA Lender With No Overlays

Gustan Cho Associates has no overlays on VA loans. We do not have any credit score minimum requirements nor debt to income ratio cap. Gustan Cho Associates has a national reputation for its ZERO VA LENDER OVERLAYS. Borrowers can definitely qualify for VA Loans With Bad Credit if they meet minimum VA Guidelines. 

Not All Lenders Have Same VA Loans With Bad Credit Guidelines

VA loans are much easier to qualify than any other loan program. VA Loans are the BEST mortgage loan program in the nation. HOWEVER, only Veterans of the United States Military with a COE, CERTIFICATE OF ELIGIBILITY, can qualify for VA loans. Just because borrowers are Veterans of the United States Armed Forces with a COE, they still need to qualify and meet VA Guidelines

The Role of The Veterans Administration

how VA Loans work VA Loans are home loans that originated through private mortgage companies and banks. Here is how VA Loans work:

  • The United States Department of Veteran Affairs is VA
  • VA is not a lender but oversees the VA mortgage process
  • VA’s role is to ensure VA Loans are originated and funded by lenders who are VA approved
  • The way the guarantee works is for any VA loans that are originated by Lenders that default and go into foreclosure, VA will guarantee and insure the lender that has originated and funded the loan against losses
  • The VA Loan Guarantee by the Department of Veterans affairs allows private lenders to keep on originating VA loans with no money down and very low mortgage interest rates due to little risk due to the guarantee by VA

How Do I Qualify For VA Loans With Bad Credit

VA loans is the easiest mortgage loan program to qualify for and qualifying for VA Loans with bad credit is one of the specialties of Gustan Cho Associates. The United States Department of Veterans Affairs is aware and fully takes into consideration that Veterans often can have bad credit and low credit scores due to being deployed while serving in the United States Armed Services. There are countless factors where Veterans can have lower credit scores and bad credit. Due to these circumstances, VA understands when Veterans apply for a home loa. They created very lenient credit and income guidelines when Veterans are applying for VA loans with bad credit.

How To Get Automated Approval On VA Loans With Bad Credit

VA loans are the best mortgage program. It has very easy borrower qualification requirements. VA loans offer one of the lowest mortgage interest rates out of any mortgage loan program. VA eligibility guidelines on VA loans with bad credit. Here are general borrower requirements for VA loans:

  • VA loans do not require any down payment
  • 100% down payment on VA loans
  • Not everyone can qualify for VA loans
  • Only Veterans with a Certificate of Eligibility are eligible for VA loans
  • VA Loans are for owner occupant properties only
  • One to four-unit properties are eligible for VA loans
  • Gustan Cho Associates has no lender overlays on government and conventional loans
  • The only requirement is the borrower either get an approve/eligible per AUS or meet the manual underwriting guidelines for VA loans
  • As long as borrowers get an approve/eligible per Automated Underwriting Approval, Gustan Cho Associates will close on your VA loan
  • There is no debt to income ratio requirements on VA loans

Comparing VA Versus FHA Credit Requirements

The United States of Veteran Affairs realizes that most veterans have lower credit and/or bad credit than the civilian public due to the following reasons:

  • Our government views that most veterans do not have had credit established as the civilian public
  • This is because of their constant transfers and/or deployment while serving in the Armed Service
  • Due to this reason, they either have no credit, little credit or bad credit thus many veterans have little to no credit tradelines
  • Most Veterans of the Armed Services do not take on student loans
  • This is because, in the event that they do, the military pays for the student loans such as the ROTC college programs and those who are enrolled at any one of the United States Military, Naval, Air Force Academies have government-paid tuition and board
  • Most Veterans do not have established credit
  • This is because most Veterans do not have automobile loans or other credit
  • When a Veteran is deployed overseas, the Veteran often has difficulty making timely payments on his or her debt back home.
  • If the Veteran is deployed overseas and during wartime, missing a few months in payments on his or her bills can easily plummet the Veteran’s credit scores

The United States Department of Veteran Affairs understands this and that is why qualifying for VA Loans with bad credit is easy.

What Lender Is Best For VA Loans With Bad Credit

What Lender Is Best For VA Loans With Bad Credit

Many Veterans will have less than perfect credit after retiring from the military and the VA fully understands that. The U.S. VA Guaranty program already accounted for the fact that it is very probable for Veterans to have lower credit scores or bad credit. VA also has much more lenient credit guidelines than FHA loans. It is very important for borrowers to understand the minimum VA loan requirements and guidelines. If the borrower gets denied a VA loan from one lender and meets the agency guidelines of the Veterans Administration, they can qualify for a VA loan with a lender with no lender overlays.

Comparison Of VA Versus FHA Credit Guidelines

Here Are VA Credit Guidelines Versus FHA Credit Guidelines:

  • The waiting period is two years after a Chapter 7 Bankruptcy discharge date to qualify for a VA loan
  • It is the same waiting period to qualify for an FHA loan
  • The waiting period to qualify for a VA loan after a short sale, foreclosure, deed in lieu of foreclosure is two years
  • For FHA, the waiting period is three years to qualify for an FHA loan after a short sale, foreclosure, deed in lieu of foreclosure
  • Students Loans that have been deferred for 12 or more months are exempt from debt to income calculations with VA loans
  • HUD does not exempt deferred student loans from debt to income ratio calculations

As you can see, VA credit guidelines are much more lenient than HUD Guidelines.

Why Am I Told I Do Not Qualify For VA Loan With Bad Credit But Qualify For FHA Loans?

There is not a day that goes by that I do not get a call from a Veteran who is told that they do not qualify for a VA Loan unless they have at least a 620 or 640 credit score:

  • Or that they do not qualify for a VA loan because their debt to income ratios are higher than 41% DTI
  • These lenders tell our heroes misinformation and blatantly lie to them
  • These Veteran home buyers may not qualify for a VA Loan with them BUT they do qualify for a VA Loan with a Lender with no overlays
  • VA does not have a debt to income ratio requirement
  • There is no credit score requirement

Contact Us at GCA Mortgage: We are Experts Working VA Loans with Bad Credit

If you are told that you do not qualify for a VA loan due to not having credit scores over 620, please contact us at Gustan Cho Associates at 262-716-8151 or email us at [email protected] Text us for a faster response. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays. GCA Mortgage has a national reputation for not having any lender overlays on VA loans. We have helped thousands of veterans and their families qualify for VA loans with credit scores down to 500 FICO and debt to income ratio surpassing 60% DTI. Gustan Cho Associates has a reputation for being able to do loans other lenders cannot do. Over 75% of our borrowers are folks who could not qualify at other mortgage companies.

Here are the latest reviews of what people are saying about us

The best place to get a mortgage. They are VA-approved lenders with no overlays. You can have a 500 FICO score and still get FHA Loan. They specialize in USDA Loans, IHDA Loans, downpayment Assistance, and VA Loans. Over 75% of their business are people with bankruptcy, foreclosures, and collection accounts. They get you in a house when nobody will do. Most of the banks, Chase, Wells Fargo, Fifth 3rd bank requires 640+ FICO. If you’re are at 639 they will send you home and tell you that you do not qualify. Those guys at Gustan Cho Associates don’t mess around and don’t waste your time. They are available 24/7 and always trying to help people who are first-time homebuyers, veterans, looking for mortgage down-payment assistance, or trying to find good mortgage rates! – Pete R.
Gustan Cho is responsive, informative, and fast! As a first-time homeowner, I appreciated the level of detail that was explained with each step, as well as the patience displayed in those explanations. On our first phone call, I think he spent over an hour personally explaining the home buying process and then went on to presenting options best suited for me and my specific situation and preferences. As well, he and his team are extremely responsive at all hours of the day. At the end of the day, I am closing on my house without any hiccups and I could not have been any happier with the transparency and quality of service provided by Gus and his team. – Maria. F

Awesome place to work. Great place to be. I wish I could give it 6 stars. – Matt H.

 

 

 

 

Not All VA Lenders Have The Same VA Loan Requirements

We will discuss more changing lenders after getting denied on VA loans with bad credit and how to get approved and closed on your VA loan. Borrowers can qualify for VA Loans Bad Credit as long as they meet the minimum VA Agency Mortgage Guidelines. VA loans are the best home mortgage program in the nation. Lenders offer 100% financing on VA loans with no mortgage insurance required at lower than mortgage rates on a conventional loan. Only active and/or retired members of the U.S. Military with a certificate of eligibility are eligible to qualify for VA loans.

The Veterans Administration Takes Care Of Eligible Veterans By Rewarding Them Eligibility On VA Loans

The Veterans Administration Takes Care Of Eligible Veterans By Rewarding Them Eligibility On VA Loans

The federal government really looks out to its active and/or retired members of the Armed Forces. The government wants to do everything possible to reward our brave men and women in uniform in them being able to qualify for a home loan with no money out of their pocket and lenient credit guidelines. There are no minimum credit score requirements on VA loans as long as the borrower can get an approve/eligible per AUS. There is no maximum debt to income ratio caps on VA loans as long as the borrower can get AUS approval. Gustan Cho Associates is a national mortgage company licensed in multiple states with no lender overlays on VA loans. Gustan Cho Associates just go off the automated findings of the AUS and has zero lender overlays on government and conventional loans. 

One Of The Many Benefits Of VA Loans Is There Is No Maximum Loan Limit Caps

Borrowers who are members of the United States Armed Forces, including the National Guard, may qualify for VA Loans. The VA allows eligible veterans of the United States Armed Services with a certificate of eligibility (COE) to qualify for VA Loans with no money down and 100% financing. Veterans get now qualify for VA Loans with no money down without a maximum loan limit cap. The VA has lenient agency mortgage guidelines than any other home mortgage program. FHA loans, the maximum loan amount is $420,680. This holds true unless the subject property is located in a high-cost area like many counties in California. California has the largest population out of any state in the United States.

Loan Level Pricing Adjustments On High-Balance VA Loans

There are no changes in qualifying for standard VA loans versus high-balance VA loans except pricing adjustments due to being higher than $647,200. High-balance VA loans are also referred to as Jumbo VA loans. VA loans have no maximum loan limit cap. However, there is loan level pricing adjustments (LLPA) on Jumbo VA loans. This means higher rates on high-balance VA jumbo loans.

VA Loan Limits In High-Cost Areas

The average California housing price of $698,000  is double the national median home price of $447,500. Many counties of California are high-cost areas where the maximum FHA and Conventional loan limit is capped at $970,800 for 2022. California housing market forecast is home prices are expected to keep on going up due to the major housing shortage in all parts of California. The major reason why California’s home values are double the national median average price is due to California’s housing shortage. Many homebuilders find it hard to make a decent profit in California than in other parts of the country due to the tough environmental regulations and the red tape when it comes to construction and development. As of January 1st, 2020, there is no longer a maximum loan limit on VA loans. Qualifying for VA Loans With Bad Credit with a mortgage company licensed in multiple states with no lender overlays.

FHA Versus VA Loans Mortgage Comparisons

FHA Versus VA Loans Mortgage Comparisons

Many Veterans who had a certificate of eligibility had a hard time getting VA Loans with Bad Credit in the past and had to resort to FHA-insured loans instead, which require 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
  • Or they need to qualify and meet manual underwriting guidelines
  • Key in manual underwriting is borrowers need to have been timely on all their payments for the past 24 months
  • 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
  • HUD, the parent of HUD, does not require that open collections and charged-off accounts be paid off to qualify for FHA loans
  • 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

As long as borrowers are a veteran and have the certificate of eligibility paperwork, veteran borrowers can qualify for a VA loan with bad credit with no money down, 100% financing, and no mortgage insurance premium. There is a funding fee for VA loans Bad Credit. The VA Funding Fee of 2.15% of the loan amount is similar to the FHA upfront mortgage insurance premium. The funding fee, normally 2% to 3%, can be rolled into the VA loan. Or the upfront VA Funding Fee can be paid with seller concessions and/or lender credit as part of closing costs.

No Down Payment Requirement With No Closing Costs On VA Loans

There are many case scenarios where a Veteran can purchase a home with no money down. Sellers concessions are allowed which can cover all closing costs as well as pre-paid which are property tax and insurance escrows. If the homebuyer is short in covering closing costs with seller concessions, the lender can offer a lender credit in lieu of a higher rate to cover closing costs. Department of Veteran Affairs allows up to 4% sellers concessions by sellers to cover veteran home buyers closing costs. Seller concessions can only be used for closing costs and not for the down payments on a home purchase. 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 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 program. No mortgage insurance premium is a major plus. There is no funding fee for disabled veterans. The funding fee is waived.

VA Loans With 500 Credit Scores

VA Loans With 500 Credit Scores

We can now approve VA loans for veterans with credit scores as low as 500. Open collections and other derogatory credit are dealt with on a case-by-case basis. Manual underwriting VA loans are now allowed. 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. For 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 Lender For Bad Credit

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 at 262-716-8151 or text us for a faster response.  Or email us at [email protected] We are available 7 days a week, on evenings, weekends, and holidays.

What Is The Minimum Credit Score To Get Approved For VA Loans With Bad Credit

Most veteran home buyers looking to get qualified for VA Home Loans Bad Credit and Low Credit Scores do not realize that the U.S. Department of Veteran Affairs (VA Home Loans) does not have a minimum credit score requirement.

Debt To Income Ratio Guidelines for VA Loans with Bad Credit

VA also does not have a maximum debt to income ratio cap. The reason why veteran home buyers often ask what is the minimum credit scores required is that most lenders have their own credit score requirements that are called lender overlays. Most lenders require 620 to 640 credit scores. They also have a maximum debt to income ratio requirement of 45% to 50%.

Research for the Best VA Lender For VA Loans with Bad Credit

GCA Mortgage is a mortgage company with no overlays on VA loans. Gustan Cho Associates Mortgage does not have minimum credit score requirements on VA Loans with Bad Credit. The team at GCA Mortgage does not have lender overlays and has no maximum debt to income ratio cap on VA loans. As long as veteran borrowers get an approve/eligible per Automated Underwriting System findings, we just go off the AUS.

Mortgage Guidelines On VA Loans With Bad Credit

VA Home Loans are hands down the best mortgage loan program in the United States. However, VA loans are only for veteran borrowers with a valid Certificate Of Eligibility (COE). Our government rewards the veterans of our military with VA Loans in honor of their service to this country. The U.S. Department Of Veteran Affairs realizes that our veterans may have less than perfect credit due to deployment. Due to this reason, VA Guidelines are very lax and easier to qualify than other loan programs. No down payment is required. 100% financing. There is an upfront VA Funding Fee but that can be rolled into the VA Home Loan Balance.

What Does The Department Of Veterans Affairs Do For VA Loans

One important fact veteran borrowers need to understand is that the U.S. Department of Veteran Affairs does not originate nor fund VA Mortgages. The function and role of the VA are to guarantee and insure VA loans that have been originated, underwritten, and funded by private VA-approved lenders. VA insures VA Loans if veteran borrowers default on their VA Loans. VA will insure the lender the portion that the lender lost due to the defaulted VA loan. VA mortgage rates are among the lowest out of all loan programs.

Mortgage Rates On VA Loans

Mortgage Rates on VA loans are based on borrowers’ credit scores. The fact that VA does not require annual mortgage insurance saves homeowners thousands of dollars every year. There are no minimum credit scores required on VA loans with bad credit.  Credit Score requirements are up to the lender that is willing to originate and fund the VA Loan. Gustan Cho Associates Mortgage Group does not have any credit score requirements.

VA Loans With Bad Credit New Lender Options After Denial: Take a Look at VA Guidelines

Gustan Cho Associates Mortgage is a mortgage broker licensed in 48 states with dozens of investors with no lender overlays on VA loans. We have zero overlays on government and conventional loans. Over 75% of our borrowers are folks who could not qualify for VA Loans elsewhere due to those lenders having overlays on their VA Loan Programs.

Understanding The Difference Between VA Guidelines Versus Overlays From Mortgage Lenders

What are overlays?

Overlays are additional mortgage guidelines on VA Loans that are above and behind those mandated by the U.S. Department of Veteran Affairs. For example, VA does not require a minimum credit score requirement. VA does not require debt to income ratio requirements. As long as our borrowers can get an approve/eligible per Automated Underwriting System Findings, We can guide our veteran borrower to the road to a CTC and close on their VA loan.

Why Do VA Lenders Require A 620 Credit Score Or Higher When The VA Has No Minimum Credit Score Requirements

Most lenders will require a 620 credit score. This is a credit score overlay on VA loans. Most lenders will require 43% to 50% debt to income ratios. VA does not have a debt to income ratio cap on VA loans. This lender is said to have lender overlays on debt to income ratios on VA loans. If one lender turns down a veteran home buyer does not mean they do not qualify with another lender.

How To Get Approve/Eligible Per Automated Underwriting System On VA Loans

FHA Versus VA Home Loans Bad Credit

As mentioned in earlier paragraphs, the Department of Veteran Affairs does not require credit scores or debt to income ratio requirements. However, borrowers do need to get an approve/eligible per Automated Underwriting System unless the VA Loan is a manual underwrite. Veteran Borrowers can get automated approval on VA Home Loans’ bad credit. They do not have to pay off outstanding collections and charged-off accounts to qualify for VA Home Loans with bad credit. However, AUS does frown upon the fact that bad credit does continue after a prior isolated incident of having prior bad credit.

How To Get An Automated Approval Via AUS With Bad Credit

Here are the key points to keep in mind to get an approve/eligible per AUS:

  • A credit score of 580 or higher
  • No late payments in the past 12 months
  • Debt to income ratios under 50%
  • Reserves
  • No late payments after housing event and/or bankruptcy
  • The Automated Underwriting System will favor a mortgage applicant with a 550 credit score with no late payments than a 640 borrower with multiple late payments

FHA Versus VA Loans With Bad Credit

VA has much more lenient credit requirements than other loan programs. For example, the waiting period to qualify for VA Home Loans after a housing event (after foreclosure, deed in lieu, short sale) when the waiting period is three years on FHA Loans. However, FHA is much laxer when it comes to outstanding collections and charged-off accounts. If veteran borrowers cannot get an approve/eligible per AUS Findings to large amounts of collections and charged-off accounts, the loan officer can see if they can run AUS for an FHA AUS Approval. Veteran home buyers can get an FHA Loan and refinance with a VA Loan at a later date. Homebuyers who need to qualify for VA Loans with Bad Credit with a lender with no mortgage overlays, please contact us at Gustan Cho Associates Mortgage at 262-716-8151 or text us for a faster response. Or email us at [email protected] We are available 7 days a week, on evenings, weekends, and holidays.