VA Mortgage Loans In Arizona Eligibility Requirements 2022

Gustan Cho Associates are mortgage brokers licensed in 48 states

We will be covering qualifying and getting approved for VA mortgage loans in Arizona. Arizona is one of the most migrated states in the nation. Tens of thousands of families are moving to the state due to the great economy, low taxes, affordable housing, and low cost of living. Thousands of Californians are moving to Arizona due to the high cost of living and outrageous home prices. Cost of living, taxes, job opportunities, and affordable housing is the main reason why people from other states are moving to Arizona. Among the tens of thousands of Americans moving to Arizona are active and retired members of the U.S. Armed Forces who are eligible to purchase a home with a VA loan. Homebuyers with a VA COE are eligible for a VA loan with no lender overlays on credit scores, debt-to-income ratio, and prior bad credit in Arizona at Gustan Cho Associates.

How Do VA Mortgage Loans Work In Arizona?

President Franklin D. Roosevelt created and signed into law the Servicemen’s Readjustment Act in 1944. This is more commonly known as the G.I. Bill, to reward veterans and qualified family members of the United States Armed Forces. This generous bill for veterans by President Franklin D. Roosevelt allocated funding for college education, books, unemployment benefits for veterans for a year, and housing benefits. VA mortgage loans in Arizona are only for eligible active duty and/or retired veterans or spouses of deceased eligible veterans with a valid certificate of eligibility (COE). Homebuyers can purchase a home with no money down with no mortgage insurance. There is no loan limit cap on VA mortgage loans in Arizona.

How Can I Qualify For VA Loans In Arizona?

Veterans with the housing benefits from the Department of Veteran Affairs get a Certificate Of Eligibility (COE) which enables them to qualify for VA Loans. VA Loans offers 100% financing. Qualified Veterans can purchase a home with no money down and no closing costs. 4% of seller’s concessions are allowed by home sellers to the home buyer to cover closing costs. In the event sellers will not give sellers concessions, the Lender can give lender credit to cover part or all closing costs. In this article, we will cover and discuss qualifying for VA Loans With No Lender Overlays And Low Credit Scores at Gustan Cho Associates.

What Is The Lowest Credit Score You Can Have To Get a VA Loan in Arizona?

The housing benefits came in the form of the VA mortgage loan. It enabled veterans of the United States Armed Forces to purchase a home without any down payment of their own. Over 30 million veterans are eligible for VA loans under the Servicemen’s Readjustment Act. It is also known as the GI Bill. No down payment is required, 100% financing, on VA mortgage loans. No mortgage insurance. There are no maximum loan limits on VA mortgage loans. There is a one-time VA funding fee that can be added to the loan balance. There are no down payment and no mortgage insurance requirements. There is no minimum credit score requirement on VA loans. There is no maximum debt-to-income ratio cap. There is no loan limit. You can qualify for VA home loans with bad credit and low credit scores. VA mortgage rates are generally lower than conventional mortgages. There is no other mortgage loan program that is better than VA loans.

What Are VA Mortgage Loan Guaranty Benefits?

VA mortgage loans are provided by VA-approved lenders such as banks, credit unions, mortgage companies, and other financial institutions. The U.S. Department of Veterans does not guarantee VA mortgage loans. The VA guarantees a maximum of 25% of a VA loan amount and every veteran must qualify for the program if they want to participate in it. One of the things that veterans who are interested in must qualify for is the credit and income criteria. Having a COE by the Department of Veterans Affairs does not guarantee a veteran a VA Loan. Veterans need to qualify for VA Loans. Not all VA Lenders have the same requirements for VA mortgage loans.

Arizona VA Mortgage Lenders For Bad Credit

Lenders Of VA Home Loans

VA agency guidelines on bad credit, credit scores, and debt-to-income ratios are very lenient. VA has no minimum credit scores requirements. You can have outstanding collections and charged-off accounts and not worry about paying them to qualify for VA mortgage loans. However, not all lenders are the same. Lenders need to make sure borrowers meet the minimum agency guidelines of the VA if they want to be insured in the event the borrower defaults on the VA loan. But lenders can have higher lending requirements on VA mortgage loans than the minimum allowed called lender overlays. An eligible borrower may get denied for a VA loan with one lender but approved with a lender with no overlays. This is why it is important for borrowers to understand the basic VA agency guidelines.

Who Originates VA Loans For Bad Credit In Arizona?

VA mortgages are originated, funded, and serviced by the following financial institutions:
  • Banks
  • Mortgage Bankers
  • Credit Unions
  • Mortgage Brokers can broker VA loans to wholesale lenders
  • Other lending institutions that are VA Approved

You can qualify for VA loans with bad credit and credit scores down to 500 FICO. A large percentage of our borrowers at Gustan Cho Associates are folks who could not qualify for a VA loan at other lenders due to lender overlays. We help borrowers with credit scores down to 500 FICO and over 60% debt-to-income ratio as long as they had timely payments in the past 12 months.

Who Qualifies For VA Loans in Arizona?

Some of the mortgage loan lending criteria apply to veterans who served to defend our country in wartime;

  • World War II
  • Korean War
  • Vietnam War
  • Persian Gulf War
  • Recent war against terrorism, Afghanistan, and Iraq

VA Loan Eligibility Requirements

Other veterans who qualify for a VA mortgage loan are those veterans who have completed at least 181 days of active duty or 90 days of active duty during the gulf war. The VA eligibility certificate is also rewarded to veterans who were discharged from active duty due to disability, injury, medical condition, or budget cutbacks. It also applies to a spouse of a military veteran who has died on active duty and is not currently remarried.

What Do VA Mortgage Lenders in Arizona Need For a VA Loan?

Gustan Cho Associates needs the following checklist to start the mortgage process for VA mortgage loans:

  • Driver’s license, passport, or a government-issued ID
  • Past two years of W-2 statements and/or income documentation for 1099 wage earners and/or self-employed borrowers
  • Past two years of federal income tax returns.
  • Most recent 60 days of bank statements from checking, savings and retirement accounts.
  • 30 days of paycheck stubs
  • VA disability awards letter (if applicable)

VA Credit Score Requirements in Arizona

VA does not have a minimum credit score requirement. The team at Gustan Cho Associates has closed many borrowers on VA loans with credit scores down to 500 FICO and debt to income ratio surpassing 60% DTI. However, borrowers either need to get an approve/eligible per automated underwriting system (AUS) or qualify for a manual underwrite. VA and FHA loans are the only two loan programs that allow manual underwriting. The key to getting an AUS approval on VA loans is to have been timely in the past 12 months on all monthly payments. VA manual underwriting guidelines require timely payments in the past 12 months, preferably 24 months.

VA Debt To Income Ratio Requirements in Arizona

VA does not have any maximum debt to income ratio requirements.

VA does not have any maximum debt to income ratio requirements. As long as the veteran mortgage application gets approve/eligible, the VA Loan should close with VA Lenders with no overlays. We have approved and closed many borrowers on VA loans with debt to income ratios exceeding 60% DTI. As long as the borrower has a strong residual income, they should get an AUS approval.

VA Guidelines After Chapter 13 Bankruptcy in Arizona

There is a two-year waiting period after a Chapter 7 Bankruptcy to qualify for VA mortgage loans in Arizona. Lenders expect rebuilt and re-established credit after bankruptcy. No late payments after the bankruptcy discharged date. Borrowers should have rebuilt and re-established credit after bankruptcy. Borrowers with Chapter 13 Bankruptcy discharge that have not been discharged for at least 24 months, need to be manually underwritten. VA manual underwriting guidelines apply.

VA Loans After Foreclosure, Deed In Lieu Of Foreclosure, Short-Sale

There is a two-year waiting period after the recorded date of foreclosure and/or deed in lieu of foreclosure to qualify for VA mortgage loans. The waiting period start date begins on the date the deed has been transferred out of the homeowner’s name and/or the date of the short sale. There is a two-year waiting period to qualify for VA mortgage loans after a short sale. The waiting period start date begins the date of the short sale reflected on the closing statement. No late payments after the housing event. Re-established credit will provide borrowers with a good credit score and profile after a housing event.

VA Guidelines During Chapter 13 Bankruptcy in Arizona

Veterans who are in a Chapter 13 Repayment Plan Bankruptcy can qualify for VA mortgage loans one year into a Chapter 13 Bankruptcy with Trustee Approval. Eligible borrowers can qualify after they have been in the Chapter 13 repayment plan for at least 12 months. Lenders require proof the borrower has made timely payments during the bankruptcy repayment plan with no missed payments. Needs to be a manual underwrite. VA guidelines during Chapter 13 Bankruptcy apply to both home purchase and refinance VA mortgage loans.

VA Guidelines on Manual Underwriting in Arizona

Manual underwriting means the file is assigned and manually underwritten by a human underwriter. More scrutiny is placed on manual underwriting than on borrowers with automated underwriting system (AUS) approval. There is no maximum debt-to-income ratio cap on VA mortgage loans as long as the borrowers get an AUS automated underwriting system approval. However, on VA manual underwrites,
there is a debt-to-income ratio cap based on the number of compensating factors. Verification of rent is required on all manual underwrites. Gustan Cho Associates can exempt rental verification on manual underwrites if the borrower is living rent-free with family. A living rent-free form provided by the lender needs to be completed by the property owner.

VA Guidelines on Debt-To-Income Ratio on Manual Underwriting

Manual underwriting guidelines on VA mortgage loans restrict the DTI on VA loans. The debt to income ratio is determined by the number of compensating factors. The debt-to-income ratio cap on manual underwrites on VA loans is just a recommended guideline from the Veterans Administration. Mortgage underwriters have a lot of discretion on manual underwrites. Mortgage underwriters can approve manually underwritten borrowers with up to 55% DTI if the underwriter sees strong compensating factors and strong residual income when the maximum recommended DTI is 50%. Here is the debt-to-income ratio cap on VA mortgage loans on manual underwriting: 31%/43% with no compensating factors, 37%/47% with one compensating factor, 40%/50% with two compensating factors.

VA Guidelines After Chapter 13 Bankruptcy in Arizona

There is no waiting period after the Chapter 13 Bankruptcy discharge date to qualify for VA Loans. If Chapter 13 Bankruptcy discharge has not been seasoned for two years, it needs to be a manual underwrite.

Can You Be Approved For a VA Loan With Bad Credit?

Homebuyers can qualify for VA mortgage loans with bad credit.

Homebuyers can qualify for VA mortgage loans with bad credit. The key is having bad credit is fine but lenders want to see timely payments for the past year. You cannot have multiple recent late payments and be eligible for VA loans. Charge offs and collections do not have to be paid to qualify for VA mortgage loans. Veterans with a COE who need to need more information on VA mortgage loans, contact us at Gustan Cho Associates at [email protected] or call us at 262-716-8151. Text us for a faster response. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.