VA Manual Underwrites – Have You Recently Been Denied for a VA Loan?

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One of the most rewarding Veteran Affairs benefits in which members receive is that in most cases, qualified homebuyers are not required to put money toward a down payment. The main goal of a VA mortgage is to make it easier for service members to receive financing by offering loans that don’t require down payment as well as more lenient credit and income requirements than conventional or FHA mortgages. 

Getting pre-approved before applying for a VA loan is the best way to market your application to sellers. However, just because you’re pre-approved doesn’t mean you’re all the way there. Before pre-approving your loan, a lender will review the bare minimum documents. Additionally, they will pull your credit and ask for your income. Once all of the paperwork is in order, the lender will write you a letter so you can start shopping for your new home. This letter states that your lender has every intention of approving your loan, but other factors play a role in the final decision. 

Why Did I Get Denied for a VA Loan?

The automated underwriting system could deny your loan for numerous reasons. Perhaps something was input incorrectly, or because something was reported wrong on your credit. It may also be due to:

  • Foreclosure, short-sale, or deed-in-lieu of foreclosure
  • Late mortgage payments
  • Default or delinquency on federal debt
  • Filing for bankruptcy in the last two years
  • A lack of credit history 

How Can I Get Approved for a VA Loan? 

When pursuing a VA loan, the first step is to get pre-approval for a specific amount so you can begin your property search. Pre-approval shows sellers and real estate agents that you are prepared to become a military homeowner. Additionally, there is an extra step that pertains particularly to VA loans that you will need to take. That requires obtaining a valid Certificate of Eligibility (COE). The certification demonstrates that you met the minimum service requirements to be considered eligible through the Department of Veterans Affairs. 

Service requirements are needed to be deemed qualified for a VA loan such as

  • During a war, you contributed 90 consecutive days of active service. 
  • During peacetime, you contributed 181 days of active service.
  • You served six years in the National Guard or Reserves.
  • Your spouse died in the line of duty. 

If a lender turns you down, it’s possible that they are underqualified, not you. Because there are vast amounts of moving components with a VA loan, an inexperienced officer can easily make a mistake. That is why it’s imperative to do your research and find an experienced VA lending specialist before first applying for a VA loan. 

VA Manual Underwriting Supports Military & Veteran Buyers 

Manual underwriting is typically your safest route when seeking a VA loan. Unlike automated underwriting, this means that a VA home loan underwriter manually calculates debt-to-income ratios, as well as income and financial history. Your lender will pinpoint any issues should they arise and look for compensating factors to prove that you are a responsible borrower. There are no exceptions to manual underwriting. 

Automated underwriting involves a lender using an online portal to upload your loan application, income, assets, reserves, and all other criteria necessary for approval. The online portal then uses those factors to determine if you qualify for the loan. Because the system is automated, it uses an algorithm. That means if you are pre-approved, it becomes the lender’s responsibility to verify each piece of information provided by you. If a lender is inexperienced, or not aggressive enough in underwriting their interpretation of the guidelines, your chances of receiving an automated decision will drop significantly. 

When financial hardships occur, find a lender willing to put in extra time and energy to assist you. If you were refused a VA loan or fear approval denial, contact us directly to discuss resolution options.



Joseph M. Savino is a 29-year mortgage expert with 17 years of direct underwriting experience. He is a previous owner of a two top rated correspondent mortgage companies. He is a degreed graduate of DePaul University in Chicago, IL. Currently working at American Financial Network, Inc as a Regional Manager and National Renovation Division Manager. Licensed in all states we are experts in FHA, VA, USDA, Conventional loans, Renovation loans, Reverse mortgages and Non-QM (Qualified Mortgages) including bank statement loans, asset-based loans, and stated income loans for self-employed borrowers as well as hard money loans.

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