This article is about VA TBD Manual Underwriting Mortgage Guidelines On Pre-Approvals
VA TBD Manual Underwriting Mortgage Process.
Gustan Cho Associates are excited to re-introduce our TBD underwriting process. We are now able to send applications that require a manual underwrite to our underwriting staff in advance. Receiving a pre-approval from an underwriter will help numerous clients take the confusion out of the mortgage lending.
If you follow our website, you know we deal with some unique mortgage scenarios. We specialize in FHA and VA manual underwriting as well as specialty conventional products such as HOMEREADY and HOMESTYLE. We even offer a VA RENOVATION LOAN.
However, the bulk of our clients are struggling to obtain a loan with their current lender or are not receiving the customer service they need to get their mortgage closed. There are thousands of mortgage companies and even more loan officers. Mortgage lending has thousands of guidelines that take years to understand. Newer and less experienced loan officers may not give you the best service. That is unintentional. However, it can cost you thousands of dollars. Receiving a MORTGAGE DENIAL is one of the scariest things that can happen.
In this blog, we will detail how to utilize our TBD underwriting process for VA manually underwritten mortgages.
Qualifying For A VA Loan
VA lending can be incredibly confusing.
Most VA lenders have an additional set of LENDER OVERLAYS that create confusion in this market space. Since many lenders will tell borrowers need a 620 credit score to qualify for a VA loan, some veterans do not apply, when in fact they could qualify to buy a home. We specialize in lower credit score and unique mortgage situations, especially on our VA mortgage products.
We do not have any lender overlays on our VA mortgage products and can stretch our debt to income ratio further than most lenders. We have closed files with up to 65% debt to income ratios!!!
The veteran must also pass the VA RESIDUAL INCOME qualifications, but we are able to close higher debt to income ratio loans. The last thing we want to do is stretch your budget, we want to make sure you are in an affordable monthly payment. Speak With Our Loan Officer for VA Loans
What is Required for Manual Underwriting?
1. Credit Requirements:
- Credit Score: While there isn’t a specific credit score requirement set by the VA, lenders usually ask for a minimum score of 580 for VA TBD Manual Underwriting.
- Credit History: A thorough review of the borrower’s credit history, including payment history, bankruptcies, foreclosures, and any significant negative items. Borrowers may need to provide explanations for any derogatory marks.
2. Debt-to-Income (DTI) Ratio:
- Maximum DTI: Generally capped at 41% for VA Home Loans under manual underwriting. Exceptions can be made with strong compensating factors.
- Residual Income: Borrowers must meet residual income requirements, which vary based on family size and geographical location. This ensures there is enough income left after paying all monthly obligations.
3. Employment and Income Verification:
- Employment History: A stable employment history, typically with at least two years of consistent employment. Any gaps in employment need to be explained.
- Income Stability: Reliable and consistent income that is likely to continue. This includes verifying all sources of income like overtime, bonuses, and part-time work if they are regular and ongoing.
4. Asset Requirements:
- Reserves: Proof of reserves or savings that can cover a certain number of months of mortgage payments, especially important for higher DTI ratios or borrowers with credit issues.
- Down Payment: Although VA Home Loans generally do not require a down payment, having one can be a beneficial compensating factor.
5. Compensating Factors:
- Compensating factors are positive aspects that offset risks identified during VA TBD Manual Underwriting. These can include:
- Significant savings or reserves.
- A large down payment.
- A low housing expense compared to income.
- A long-term employment history.
- Extra income cannot be utilized to meet the loan requirements.
6. Documentation:
- Borrowers must provide comprehensive documentation, including:
- Pay stubs.
- Tax returns.
- Bank statements.
- Explanation letters for any credit issues or employment gaps.
7. Property Requirements:
- The VA requires that the property meets the Minimum Property Requirements (MPRs) to guarantee its safety, sanitation, and structural integrity. An appraiser approved by the VA will evaluate the property.
8. Explanation Letters:
- For any negative credit history or employment gaps, borrowers should provide detailed explanation letters to give context to the underwriter.
Considering these criteria and organizing your paperwork accordingly can greatly enhance your likelihood of obtaining a VA Home Loans through VA TBD Manual Underwriting in 2024.
How Does VA TBD Manual Underwriting Work?
How does the TBD process work?
The TBD underwriting process is a great tool for files with unique qualifications. VA underwriting has strict guidelines but also vague guidelines. There is not a viewable set of guidelines like there is for FHA mortgage lending. There are some basic qualifications you must hit such as passing your debt to income ratio.
We send your file to the underwriter upfront for scenarios with variable income, late payments, foreclosures, bankruptcies, or other reasons to downgrade to a manual underwrite. Buying a home can be stressful, the TBD underwriting tool is a way to remove stress from the process. When there are one-off scenarios, this will give you the peace of mind knowing your file will close.
The underwriter will take your application (without an address) and underwrite your credit and asset documentation. Credit history is the main concern for VA mortgage lending. Click here to apply for VA Loans with our expert
How Do Mortgage Underwriters Process VA TBD Manual Underwriting
Payment history analysis by mortgage underwriters:
While most lenders will tell you need a 620 credit score to qualify for a VA mortgage, that is not a guideline, that is an overlay. The US Department of Housing and Urban Development (HUD), is responsible for guidelines on VA mortgages, and they do not have a minimum credit score requirement. That being said, they do scrutinize your payment history with a fine-tooth comb.
In order to qualify for a VA mortgage, you need to have a clean payment history for at least the most recent 12 months. Assuming you have not missed any payments in the past 12 months, we can usually qualify you for a VA mortgage.
If you have non-medical collections in the past 12 months, that can kill your file. Now if you do have late payments in the past 12 months, it is still possible to get a VA mortgage loan. However, the underwriter will need a detailed letter of explanation with accompanying documentation to support your reason for being late. The reasoning must be strong and documentable, such as an elongated hospital stay. If you simply mismanaged and forgot a payment, that usually will not fly.
The underwriter needs to demonstrate you are responsible with your money. They must verify you have the ABILITY TO REPAY your VA mortgage.
How Long Does TBD Underwriting Take?
The duration of VA TBD Manual Underwriting for VA Home Loans in 2024 varies based on factors like the complexity of the borrower’s financial situation, the lender’s workload, and the borrower’s responsiveness. Typically, the process starts with the initial application and documentation submission, taking 1-3 days to gather and submit necessary financial documents such as pay stubs, tax returns, and bank statements.
The lender then conducts an initial review, usually within 2-5 days, to ensure all documents are present and to identify any immediate issues.
The manual underwriting process takes approximately 7-14 days, thoroughly examining the borrower’s credit, income, and assets. Suppose the underwriter identifies any conditions that must be met before final approval. In that case, the borrower must provide the requested information within 3-7 days.
The final underwriting and approval process, taking about 1-3 days, involves a final review to ensure all conditions are met before approving the loan. Overall, the TBD underwriting process for VA Home Loans in 2024 typically takes between 14 and 28 days. Nevertheless, this may differ depending on individual situations. Adequate preparation and promptness can speed up the process.
How Do Mortgage Underwriters View Assets
One of the best benefits offered to the brave Americans who serve in the military is a zero down payment mortgage loan.
Just because you do not need a down payment, does not mean you don’t need money in the bank to qualify. There are closing costs involved with the VA mortgage. It is a common misconception that the Department of Veteran Affairs will cover your closing costs, that is not the case. Keep in mind, the seller can pay up to 4% of the purchase price to help cover your closing costs. Above and beyond closing cost, you will need to have at least one month of mortgage payment in your bank you pass a VA manual underwrite. The funds left in your bank after closing costs are considered reserves.
The more reserves you have, the higher the chance you have for approval.
What is the Maximum DTI for VA Manual Underwriting?
The maximum Debt-to-Income (DTI) ratio for VA manual underwriting in 2024 is generally capped at 41%. However, exceptions can be made if the borrower has strong compensating factors that mitigate the risk associated with a higher DTI. These compensating factors include significant cash reserves, a large down payment, a long, stable employment history, or additional income not used to qualify for the loan. Meeting the residual income requirements, which ensure that the borrower has enough income left over after paying all monthly obligations, is also crucial in the manual underwriting process. Speak With Our Loan Officer for VA Loans
VA Chapter 13 Bankruptcy Mortgage Guidelines
Chapter 13 Bankruptcy Mortgage Guidelines:
If you are a veteran who is currently in a Chapter 13 Bankruptcy or less than 2 years discharged from a Chapter 13 Bankruptcy, there’s a good chance you will qualify for a VA mortgage.
This is a great opportunity to use the TBD underwriting pre-approval. Part of the process for obtaining a mortgage during a Chapter 13 Bankruptcy is trustee approval. Having a pre-approval letter signed off by an underwriter will increase your chances of approval with the trustee.
For more information on a VA mortgage with a Chapter 13 Bankruptcy involved, please call or text Mike Gracz on (800) 900-8569.
How To Start The VA TBD Manual Underwriting Mortgage Process
How to start the VA TBD underwriting process?
This process is designed to be as easy on you as possible. You will simply gather some basic documentation and complete an online application. From there we will submit all documentation to our underwriting department for credit in asset pre-approval. Below are the documents you will need:
- Last 60 Days Bank Statements – to source money for escrows/ reserves.
- Last 30 Days Pay Stubs.
- Last Two Years W2’S.
- Last Two Years Tax Returns – not always needed.
- Driver’s License.
- Certificate of Eligibility.
If you need help obtaining your Certificate of Eligibility (COE), please give us a call today. We may be able to access it for you if you have your DD-214. During the underwriting process, you may need to provide additional documentation. Once you have provided the required information, you will receive a pre-approval letter to go house shopping. Simple as that!
Gustan Cho Associates have been doing this for a long time. We specialize in lower credit score, higher debt to income ratio, and complicated mortgage scenarios. That is the reason we created our TBD underwriting process! If for any reason you do not qualify today, we will put you on a custom financial plan to qualify as soon as possible.
As a veteran, you have the ability to qualify for a home faster than most Americans. We appreciate your service and all you have done for our country, we are available for questions seven days a week. Don’t hesitate to reach out today. Connect With Our Loan Experts for VA Loans
FAQs: VA TBD Manual Underwriting Mortgage Guidelines On Pre-Approvals
- 1. What is VA TBD Manual Underwriting? VA TBD Manual Underwriting is a process where loan applications that require a manual review are sent to underwriters before finding a property. This helps clients get pre-approval from an underwriter, simplifying the mortgage lending process and addressing unique mortgage scenarios.
- 2. Why is the VA TBD Manual Underwriting process beneficial? This procedure is advantageous as it enables the early detection and solving of possible problems, decreasing confusion and stress during the home-purchasing process. It is particularly beneficial for individuals with intricate financial circumstances or those facing challenges securing loans from other financial institutions.
- 3. What are the credit requirements for VA TBD Manual Underwriting? Lenders usually expect a minimum credit score of 580 for VA loans, although the VA does not set a specific minimum score. They carefully examine the borrower’s credit history and may request explanations for any negative marks.
- 4. What is the maximum Debt-to-Income (DTI) ratio for VA Home Loans under manual underwriting? The maximum DTI ratio is generally capped at 41%. However, exceptions can be made if the borrower has strong compensating factors, such as significant cash reserves or a long employment history.
- 5. What documentation is required for VA TBD Manual Underwriting? Borrowers must provide comprehensive documentation, including pay stubs, tax returns, bank statements, and explanation letters for credit issues or employment gaps. Additional documents like W-2s, proof of reserves, and a Certificate of Eligibility may also be required.
- 6. How long does the VA TBD Manual Underwriting process take? The timeframe usually ranges from 14 to 28 days. It commences with submitting an initial application and documentation, then proceeds with an initial assessment, thorough manual evaluation, and a final approval stage. The duration may vary depending on the borrower’s complexity and promptness.
- 7. What are the property requirements for VA Home Loans? The property needs to satisfy the Minimum Property Requirements established by the VA to guarantee its safety, cleanliness, and structural integrity. An appraiser approved by the VA will assess the property to verify that it complies with these guidelines.
- 8. What are compensating factors in VA TBD Manual Underwriting? Compensating factors are positive aspects that help balance out any risks identified during the underwriting process. These factors can include having significant savings or reserves, making a large down payment, having a low housing expense compared to income, maintaining a long-term employment history, or having additional income not used to qualify for the loan.
- 9. How does one start the VA TBD Manual Underwriting process? To start the process, gather the required documentation and complete an online application. The lender will submit all documentation to the underwriting department for pre-approval. Required documents typically include bank statements, pay stubs, W-2s, tax returns, driver’s license, and a Certificate of Eligibility. Additional documentation may be requested during the process.
- 10. Can borrowers with a Chapter 13 Bankruptcy qualify for a VA Home Loan? Veterans currently in or have recently completed a Chapter 13 Bankruptcy might be eligible for VA Home Loans. Obtaining a pre-approval letter signed by an underwriter can assist in obtaining trustee approval. Borrowers are advised to get in touch with their lender for further information.
Understanding these guidelines and requirements can significantly enhance your chances of securing a VA Home Loan through VA TBD Manual Underwriting in 2024.
If you have any questions VA loans or you need to qualify for VA loans with a lender with no overlays, please contact us at 800-900-8569. Text us for a faster response. Or email us at alex@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.
This blog about VA TBD Manual Underwriting Mortgage Guidelines On Pre-Approvals was updated on June 18th, 2024.
