Comparing VA Mortgage Guidelines Versus Other Lending Programs
This BLOG On Comparing VA Mortgage Guidelines Versus Other Lending Programs Was PUBLISHED On May 29th, 2020
There are two types of VA Mortgage Guidelines:
- VA Mortgage Guidelines Determined By The U.S. Department Of Veterans Affairs
- VA Lender Overlays which are additional VA Mortgage Guidelines that is above and beyond of those of The U.S. Department Of Veterans Affairs
Most lenders will have VA Lender Overlays on VA Home Loans.
- GCA Mortgage Group is one of the very few mortgage lenders with no overlays on VA Loans
- We just go off VA Mortgage Guidelines
- VA does not have any credit score requirements nor debt to income ratio requirements
- We are going to be comparing VA Mortgage Guidelines Versus Lending Guidelines of other loan programs
- VA Home Loans are hands down the best mortgage loan programs in this country
- VA Loans offers 100% financing, no mortgage insurance premium, low mortgage rates, loan limits are the same cap as conforming loan limits
However, only veterans with a Certificate Of Eligibility (COE) are eligible.
How Government Structured VA Mortgage Guidelines
The United States Department Of Veteran Affairs and our government offers VA Home Loans to the members of our military and veterans as a benefit for serving our great country.
- The government realized that many veterans may not have the best credit in the world due to being deployed and may be late on their payments
- Many veterans who leave the military and enter the civilian workforce may have trouble getting jobs
- Due to adjustment from military to civilian life, the likelihood of veterans filing bankruptcy and/or having a housing event (foreclosure/short sale/deed in lieu) may be more likely than civilians
- Due to these factors, VA Mortgage Guidelines are more lenient that mortgage guidelines of other loan programs
Again, we will compare VA Mortgage Guidelines to FHA and Conventional Mortgage Guidelines.
VA, FHA, Conforming Loans On Waiting Period After Housing Event And Bankruptcy
Government and Conforming Loans have a mandatory waiting period after housing events and bankruptcy. VA Guidelines has the shortest waiting period after housing event in borrowers qualifying for a mortgage:
- VA requires a two year waiting period after housing event (foreclosure, deed in lieu, short sale)
- FHA and USDA requires a three year waiting period after housing event
- FHA, USDA, VA require a two year waiting period after Chapter 7 Bankruptcy discharged date to qualify for a mortgage
- Fannie Mae and Freddie Mac require a four-year waiting period after Chapter 7 Bankruptcy, Deed In Lieu Of Foreclosure, Short Sale to qualify for Conventional Loans and 7-year waiting period after standard foreclosure
- Both VA and FHA Home Buyers can qualify for VA and FHA Loans one year into a Chapter 13 Bankruptcy Repayment Plan with Trustee Approval
- There is a two-year waiting period to qualify for Conventional Loan after Chapter 13 Bankruptcy discharged date
- There is a four-year waiting period to qualify for Conventional Loans after Chapter 13 Bankruptcy dismissal date
From the mortgage guidelines above, one can see that VA Mortgage Guidelines has the shortest waiting period after housing event out of all other government and/or conventional loan programs.
VA Guidelines On Outstanding Collections And Charged Off Accounts
Veteran Borrowers do not have to pay outstanding collections and charged-off accounts to qualify for VA Loans with Gustan Cho Associates. Many VA Lenders may require borrowers to pay outstanding collections and charged-off accounts. However, VA Mortgage Guidelines do not require borrowers to pay outstanding collections and charged-off accounts. Lenders that require borrowers to pay outstanding collections and charged-off accounts are due to their mortgage lender overlays.
Deferred Student Loans With VA Loans
Any deferred student loans that have been deferred for longer than 12 months is exempt from debt to income ratio calculations on VA Loans. VA is the only loan program that exempts deferred student loans that have been deferred for more than 12 months.
Veteran borrowers with outstanding student loans that are not deferred, here is how VA calculates student loan payments:
- Take 5% of the outstanding student loan balance and divide it by 12 months
- Use that figure as the monthly student loan payment
Credit Score And Debt To Income Ratio Mortgage Guidelines
All mortgage loan programs with the exception of VA Loans have a minimum credit score and debt to income ratio requirements.
- VA does not have a minimum credit score requirement nor a maximum debt to income ratio cap
- Why is it that most lenders require a 620 credit score or maximum 45% to 50% debt to income ratio requirement when VA Mortgage Guidelines do not require it?
- The reason being is because most mortgage lenders have lender overlays on VA Mortgages
- Again, lender overlays are mortgage guidelines that is above and beyond those of VA Mortgage Guidelines
- GCA Mortgage Group does not have any lender overlays
- We do not require any minimum credit score requirements on VA Loans. VA does not have any debt to income ratio requirements
- We do not have any debt to income ratio requirements on VA Home Loans
- As long as veteran borrowers can have an approve/eligible per Automated Underwriting System Approval and they can satisfy all conditions on AUS, Gustan Cho Associates will approve and close the VA Loan
We close many veteran borrowers with over 60% debt to income ratios and credit scores under 600.
Minimum VA Mortgage Requirements
Here are the minimum credit score requirements on other loan programs:
- 580 credit scores for FHA Loans with 3.5% down payment
- Borrowers with 500 to 579 credit scores can qualify for FHA Loans but HUD, the parent of FHA, requires 10% down payment and AUS Approval
- Conventional Loans require 620 minimum credit scores
- Non-QM Loans and Bank Statement Loans for self-employed borrowers require 620 credit scores
- Lower scores allowed on non-QM loans but more down payment is required
Veteran Borrowers who need to qualify with a direct lender with no mortgage overlays can contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at email@example.com.