This BLOG On VA Overlays Versus VA Agency Mortgage Guidelines Was PUBLISHED On July 29th, 2019
Gustan Cho Associates at Loan Cabin Inc. is a national direct lender with no VA Overlays on VA Home Loans.
- Over 75% of our borrowers come to us because they could not qualify for VA Loans due to not being able to meet the mandatory credit score requirements or debt to income ratio cap
- Many lenders will require a 620 to 640 minimum credit score
- Many lenders will cap debt to income ratios at 41% to 50%
- Wait a minute!!!
- The Department of Veterans Affairs does not have minimum credit score requirements
- The VA also does not have a maximum debt to income ratio cap
- Then why are these lenders require certain credit scores and debt to income ratio requirements?
The reason is because of VA Overlays. In this blog, we will discuss Lender Overlays versus Agency Guidelines.
What Are Lender Overlays?
All borrowers need to meet minimum VA mortgage guidelines to qualify for VA Home Loans.
- VA does not require a minimum credit score requirement
- VA, also does not have a maximum debt to income ratio cap
- As long as borrowers can get an approve/eligible per automated underwriting system, they meet all VA Agency Guidelines
- However, most lenders have VA Overlays on VA Home Loans
- Let’s take the example where The VA has no minimum credit score requirements
- However, most lenders will require a 620 to 640 credit score on VA Loans
- This credit score requirement is not by the VA but by the individual lender
- Other common VA overlays are debt to income ratios
- The VA does not mandate a maximum debt to income ratio if the borrower can get an approve/eligible per automated findings
- However, most lenders will cap debt to income ratios on VA loans to 41% to 50%
The Great News is Gustan Cho Associates Mortgage Group has zero VA Overlays on VA Home Loans. As long as borrowers get an approve/eligible per AUS Findings, we will approve, process, underwrite, and close the VA Loans.
Typical Overlays Imposed By Lenders On VA Home Loans
Most lenders impose lender overlays on VA Home Loans. Gustan Cho Associates at Loan Cabin Inc. is one of the very few national direct lenders that have no Overlays on VA Loans.
Here are typical overlays most lenders impose on VA Loans:
- VA does not require a minimum credit score requirements but many lenders have overlays requiring certain credit score minimums
- VA does not have a debt to income ratio requirements: Many lenders will cap DTI on VA Loans at 41% to 50%
- VA does not require borrowers to pay outstanding collections and/or charged-off accounts: Most lenders will require derogatory credit tradelines and collections/charged-off accounts to be paid
- VA allows manual underwriting: Many lenders will not accept files that need to be manually underwriting
- VA allows homebuyers to qualify for VA Loans during Chapter 13 Bankruptcy repayment plan: Most lenders will not require this unless the Chapter 13 Bankruptcy has been discharged two years
- There is no waiting period after Chapter 13 Bankruptcy discharged date
- Most lenders have overlays requiring 2 years seasoning after Chapter 13 bankruptcy discharge date
Qualifying For VA Home Loans With Direct Lender With No Overlays
Homebuyers who are looking for a national direct lender with no overlays, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at email@example.com. We are available 7 days a week, evenings, weekends, and holidays.