The Difference Between VA Agency Guidelines and Lender Overlays On VA Home Loans
This ARTICLE Is About The VA Agency Guidelines Versus Lender Overlays On VA Home Loans
In this article, we will cover the VA Agency Guidelines Versus Lender Overlays On VA Home Loans Explained. Many of our viewers at Capital Lending Network, Inc. (CLN) come to us and ask us what are the exact mortgage guidelines on VA loans. Many borrowers are often confused on how the mortgage process works. Borrowers go to lender to lender and get conflicting reports about the lender’s VA lending requirements. They are told the minimum credit score requirements are 640 from one lender while another lender says their minimum credit score requirements is 660 FICO. Then they go to the VA government website and find out there is no credit score requirements on VA loans. So who is right.
Lender Overlays On VA Loans Explained
Why do all of these lenders have different lending guidelines on VA loans. This is one of the most asked questions at CLN Mortgage Group. The answer is there is no minimum credit requirements on VA loans. Then why do lenders have their own credit score requirements? This is because of lender overlays by the individual mortgage lender. Most mortgage lenders have lender overlays which means individual mortgage guidelines of their own that is above and beyond the minimum VA Agency Guidelines.
Do All Lenders Have The Same Lending Requirements On VA Loans
All lenders need to meet the minimum VA Agency Guidelines set forth by the Veterans Administration (VA). However, lenders are allowed to have higher lending requirements that is above and beyond the minimum agency guidelines set by the Veterans Administration. These higher lending guidelines of the individual lender are called lender overlays. Lenders can set overlays on just about anything. It is not illegal for lenders to set higher lending guidelines that is above and beyond the minimum VA Agency Guidelines. Most lenders have overlays on government and conventional loans. However, Capital Lending Network, Inc. is a national mortgage company licensed in multiple states with no lender overlays on VA loans. CLN Mortgage Group has a national reputation of not having any lender overlays on government and conventional loans.
In this article, we will discuss and cover VA Agency Guidelines Versus Lender Overlays On VA Home Loans.
VA Agency Guidelines Versus Lender Overlays: What Are Lender Overlays On VA Mortgages
As mentioned in the above paragraph, most lenders have lender overlays not just on VA loans but other government and conventional loans. Most lenders have lender overlays. However, many lenders will think it is just too risky to just go off the minimum VA Agency Guidelines. Therefore, they add additional lending guidelines of their own that surpass the minimum agency VA guidelines. All lenders need to make sure their borrowers meet the minimum VA guidelines. However, they can set additional higher lender requirements that surpass the minimum agency guidelines. There are lenders like Capital Lending Network, Inc. that has zero lender overlays. CLN Mortgage Group will just go off the automated findings of the automated underwriting system (AUS).
Capital Lending Network, Inc. has no other lending requirements above and beyond the minimum agency guidelines of the Veterans Administration.
Understanding How VA Guidelines Work
It is important for borrowers to know the basic agency guidelines set by the Veterans Administration. In the event if a lender may tell you that you do not qualify, by knowing the agency VA guidelines you will know that you meet the agency guidelines but do not qualify for a VA loan with this particular lender due to their lender overlays. Borrowers need to realize that most lenders have lender overlays on VA loans. If a lender has a minimum credit score and/or debt to income ratio requirement, you know right off the bat the lender has lender overlays. This is because there are no minimum credit score requirements or debt to income ratio caps on VA loans. Anyone with impeccable credit, high credit scores, lower debt to income ratios, and no outstanding collections and/or charged-off accounts can qualify for a VA loan anywhere. The lender can have all the lender overlays they want and you will still qualify. For borrowers with prior bad credit and/or less than perfect credit or lower credit scores may need to qualify for a VA loan with a lender with no lender overlays like Capital Lending Network, Inc.
Minimum VA Agency Guidelines On VA Loans
The Veterans Administration (VA) have much easier agency mortgage guidelines than any other home mortgage program.
Here are the minimum VA Agency Mortgage Guidelines on VA Loans:
- There is no minimum credit score requirements on VA loans as long as you get an approve/eligible per automated underwriting system (AUS)
- There is no maximum debt to income ratio as long as you get an approve/eligible per AUS
- Lenders offer 100% financing with no down payment required
- Most homebuyers do not have to worry about covering closing costs
- Closing costs are normally covered with sellers concessions and/or lender credit
- There is no mortgage insurance required on VA loans
- There is no maximum loan limit on VA loans
- There is a two year waiting period after Chapter 7 Bankruptcy discharged date to qualify for a VA loan
- There is a two year waiting period after foreclosure, deed in lieu of foreclosure, short sale to qualify for a VA loan
- Borrowers in Chapter 13 Bankruptcy repayment plan can qualify for a VA loan after being in the repayment plan for 12 months and bankruptcy trustee approval
- Needs to be a manual underwrite and no late payments during the repayment period
- There is no waiting period after Chapter 13 Bankruptcy discharged date
- Any Chapter 13 Bankruptcy discharge that has not been seasoned for at least 24 months needs to be manually underwritten
- Outstanding collections and charged off accounts do not have to be paid off to qualify for a VA loan
If you meet the above minimum VA agency mortgage guidelines and are told you do not qualify with a lender, give us a call at Capital Lending Network, Inc. at 800-900-8569 or text us for a faster response. Or email us at email@example.com. The team at Capital Lending Network, Inc. is available 7 days a week, on evenings, weekends, and holidays.