In this blog, we will be covering VA loans with no credit scores and DTI requirements. VA loans have more lenient mortgage guidelines than any other mortgage loan program. However, the Veterans Administration does NOT LIKE recent late payments in the past 12 months.
Getting an automated underwriting system approval with late payments in the past 12 months will be very difficult. Many borrowers do not know that lenders like Gustan Cho Associates offer VA loans with no credit scores and DTI requirements.
The Department of Veterans Affairs does not mandate a minimum credit score nor debt to income ratio cap on borrowers who get an approve/eligible per an automated underwriting system. Many borrowers at Gustan Cho Associates have closed their VA loans with credit scores in the 500s and over 60% DTI with an approve/eligible per AUS. But why do most lenders require minimum credit score requirements and debt-to-income ratio caps on VA loans?
What Are VA Lender Overlays Imposed By Lenders?
All mortgage lenders need to abide by VA Agency Guidelines. However, lenders can have separate lending requirements. These different individual lending requirements by lenders are called overlays. VA Agency Guidelines do not require minimum credit score requirements.
VA Loans With Credit Scores Down to 500 FICO
Borrowers with 500 credit scores can get approve/eligible per the automated underwriting system and get approved for VA loans. However, a lender may not approve a 500 credit score borrower and require a higher credit score due to their overlays. This is perfectly legal. Gustan Cho Associates is one of the few national lenders with no overlays on VA loans.
Gustan Cho Associates only goes by VA Agency Guidelines. As long as borrowers meet all basic VA agency guidelines, get an AUS approve/eligible, and meet the conditions, Gustan Cho Associates will approve and close their VA loan.
Typical lenders will cap credit score requirements on VA loans at 620. We have approved and closed countless VA loans with borrowers with credit scores below 600 credit scores. Gustan Cho Associates are zero overlays mortgage lenders and have zero lending overlays on VA loans.
VA Loans DTI Guidelines
Many borrowers do not realize that the VA does not have a minimum debt-to-income ratio requirement. However, many lenders will have VA overlays on debt-to-income ratios where they cap it between 41% to 50%. Gustan Cho Associates has gotten approve/eligible per the automated underwriting system on VA borrowers with DTI exceeding 60%.
VA loans have no maximum debt-to-income ratio cap. Gustan Cho Associates has recently closed on a VA loan with a 543 credit score and a 64 debt-to-income ratio on a manual underwrite. Over 80% of our borrowers are folks who could not qualify at other lenders.
As long as borrowers have strong residual income, the automated underwriting system will receive automated approval with a higher DTI. Residual Income is very important when getting an approve/eligible per AUS for higher DTI borrowers. Gustan Cho Associates is one of the few national lenders with no overlays on debt-to-income ratios on VA Mortgages.
Obtaining a Certificate of Eligibility on VA Loans
Only active and retired members of the United States Military with a Certificate of Eligibility can qualify for VA loans. Gustan Cho Associates will assist borrowers in obtaining their Certificate of Eligibility through the Department of Veterans Affairs. This can be done in a matter of hours, and the assigned loan officer and mortgage processor will handle it on behalf of our borrowers.
VA Eligibility Requirements
VA home loans are for owner-occupant homes only. VA loans are one of the best loan programs in the U.S. It is only for our U.S. Armed Services veterans with COE. Here are the basic VA eligibility requirements:
- VA offers 100% financing
- Upfront VA Funding Fee can be rolled into the VA loan balance.
- No closing costs: closing costs can be covered with seller concessions and lender credit
- The 2-year waiting period after Chapter 7 Bankruptcy, foreclosure, deed in lieu, short sale
- Borrowers can qualify for VA loans one year into a Chapter 13 Bankruptcy Repayment Plan
- No Waiting Period after the Chapter 13 Bankruptcy discharge date
- Outstanding collections and charged-off accounts do not have to be paid
- One to four-unit properties are eligible
- 100% cash-out refinance allowed
Qualifying For VA Loans With No Credit Scores With a Lender With No Overlays
Borrowers who have difficulty finding a lender licensed in multiple states with no lender overlays on VA loans look no further. Contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates has a national reputation for being able to close VA loans other lenders cannot.
Gustan Cho Associates are mortgage brokers licensed in 48 states, including Washington DC, Puerto Rico, and the United States Virgin Islands. The team at Gustan Cho Associates and its DBA subsidiaries have over 210 wholesale lenders. Dozens of our lending partners are wholesale lenders with no lender overlays on FHA, VA, USDA, and conventional loans.
See, only go by agency lending guidelines and have zero lender overlays. Our pre-approvals will close due to our smooth and streamlined verification and mortgage process. With a network of 210 wholesale lending partners, we have dozens of wholesale lenders of government and conventional loans with no overlays and hundreds of different mortgage options on non-QM and alternative lending mortgage loan programs. The team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays.
This BLOG On VA loans with no credit scores mortgage guidelines Was PUBLISHED and UPDATED on January 26th, 2023.
January 26, 2023 - 4 min read