VA Mortgage During Coronavirus Pandemic Economic Crisis

BREAKING NEWS: VA Mortgage During Coronavirus Pandemic Economic Crisis

What Were The Issues With Qualifying For A VA Mortgage During Coronavirus Pandemic Economic Crisis? The main issue facing VA loans during the coronavirus outbreak was most lenders increased lender overlays on VA loans. VA loans do not have a minimum credit score requirement or a maximum debt to income ratio cap. However, most lenders started increasing their minimum credit score requirements to 640 to 680 on VA loans. Many lenders started to increase the maximum debt to income ratio cap to 45% DTI when VA loans do not have a maximum DTI cap as long as borrowers can get an approve/eligible per automated underwriting system. The great news is Gustan Cho Associates still honored its no lender overlays on VA mortgages during the coronavirus outbreak economic crisis. In this article, we will discuss and cover the VA Agency Guidelines versus Lender Overlays during the COVID-19 pandemic and economic crisis.

Understanding VA Agency Guidelines Versus Lender Overlays

What are the VA agency guidelines and lender overlay

GCA Mortgage Group is getting countless calls from our viewers about qualifying for a VA Mortgage During Coronavirus Pandemic Economic Crisis. Many homebuyers are confused because they are getting conflicting answers from different lenders about the minimum credit score requirements on VA loans. One of the questions borrowers are confused about is whether the VA changed the minimum credit score requirements. Did the Veterans Administration (the VA) increase the VA agency guidelines on credit scores?  Why do lenders have different credit score requirements on VA loans?  Did VA change the no minimum credit score requirements on VA loans?  What are the differences between VA Agency Mortgage Guidelines versus Lender Overlays?  Are there any lenders that still originate and fund VA loans?  How hard is qualifying for a VA Mortgage During Coronavirus Pandemic Economic Crisis? In this breaking news article, we will discuss and cover qualifying for VA Mortgage During Coronavirus Pandemic Economic Crisis.

Obstacles And Hurdles With VA Mortgage During Coronavirus Pandemic Economic Crisis

Most lenders have completely changed their VA loan programs. Not all lenders have the same VA lending requirements. All lenders need to meet the minimum VA guidelines. However, lenders can have additional lending requirements called lender overlays. There have been no changes in the VA agency mortgage guidelines. There have been no changes in any mortgage lending guidelines on VA mortgage during the coronavirus pandemic crisis. There are no minimum credit score requirements on VA loans as long as the borrower can get an approve/eligible per automated underwriting system (AUS) There is no debt to income ratio caps on VA loans as long as the borrower can get an approve/eligible per automated underwriting system (AUS).

Qualifying For A VA Mortgage During Coronavirus Pandemic With A Lender With No Overlays

GCA Mortgage Group are experts in closing VA loans for borrowers with under 620 credit scores and over 60% DTI during the pandemic. The forbearance mortgage program included in the CARES Act pandemic has shaken up the secondary mortgage bond markets. This is the reason why lenders have restructured their business model and increased credit score requirements on VA loans. There is no interest in high-risk loans during the COVID-19 pandemic. In the next paragraph, we will discuss why lenders are not interested in originating and funding lower credit score VA loans.

Understanding VA Agency Guidelines Versus Lender Overlays

What are VA guidelines and lender overlays

The federal government created VA loans to reward eligible men and women of the U.S. Armed Services to qualify for VA loans.

Here are the bullet points on VA loans:

  • VA loans are the best loan program in the United States
  • There is no down payment required on VA loans
  • VA loans are easier to qualify than any other loan program
  • The VA realizes that veterans have a lower credit profile than their civilian counterparts due to getting transferred and/or deployed
  • However, only active and/or retired members of the U.S. Military with a certificate of eligibility (COE) and qualified surviving spouses can qualify for VA loans
  • All lenders need to make sure their borrowers meet the minimum VA Agency Guidelines

Mortgage lenders can have higher VA lending requirements that are above and beyond the minimum VA Agency Guidelines.

VA Mortgage During Coronavirus Pandemic: Understanding Lender Overlays On VA Loans

These additional mortgage guidelines imposed by individual mortgage lenders are called overlays:

  • Most lenders have lender overlays on VA loans
  • For example, the VA does not have a minimum credit score requirement
  • However, most lenders will set minimum credit score requirements such as 620, 640, 660, or 680 credit scores
  • So, if you are a borrower who was told you do not qualify for a VA loan with a particular lender, you may qualify at a different lender with more lenient lender overlays
  • The great news is Gustan Cho Associates have no lender overlays on VA loans during the COVID-19 pandemic

GCA Mortgage Group is one of the very few national lenders with no lender overlays on VA loans.

Qualifying For VA Mortgage During Coronavirus Pandemic Economic Crisis

Many borrowers meet the minimum VA Agency Guidelines but cannot qualify for a VA mortgage. This is because not all lenders have the same VA guidelines on VA loans. Most lenders have lender overlays on VA loans. Right after the coronavirus pandemic hit the U.S., the mortgage industry went into panic mode and chaos. The pandemic caused fear in the secondary mortgage bond markets. Liquidity issues on the secondary mortgage bond market created major liquidity issues where investors had no interest on mortgages with borrowers with under 700 credit scores. This is the main reason lenders increased credit score requirements to 660 to 680 FICO on VA loans. Mortgage rates for borrowers under 700 FICO were high. Not only are mortgage rates high for borrowers with under 700 credit scores, but borrowers need to pay points if their scores are under 700. Investors on the secondary mortgage bond market were trying to avoid layered risks. The lower the borrower’s credit scores, the riskier the borrower. Loan level pricing adjustments (LLPA) were extremely high for lower credit scores.

Hurdles Borrowers Are Running Into When Applying For VA Loans

What could be the obstacles when applying for VA loans

Many qualified borrowers who meet the minimum VA guidelines are getting turned down for a VA loan by lenders. This is due to lenders increasing credit score requirements and other guidelines on VA mortgages. Most lenders are now requiring anywhere between 620 to 680 credit scores on VA loans. Again, there are no minimum credit score requirements on VA loans. However, lenders can have lender overlays which are additional lending requirements above and beyond the minimum VA guidelines. There is no debt to income ratio caps on VA loans as long as the borrower can get an approve/eligible per automated underwriting system (AUS). However, many lenders are imposing strict debt to income ratio caps due to the coronavirus pandemic.

Finding And Qualifying For A VA Mortgage During Coronavirus Pandemic With No Lender Overlays

The great news is Gustan Cho Associates has no lender overlays on VA loans during the pandemic. We do not have any minimum credit score requirements or maximum debt to income ratio caps on VA loans as long as the borrower can get an approve/eligible per automated underwriting system. GCA Mortgage Group can also do VA manual underwriting with no lender overlays. If you need to qualify for a VA mortgage with a lender with no lender overlays, please contact us at 262-716-8151 or text us for a faster response. Or email us at [email protected] The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

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