VA Credit Score Guidelines For AUS And Manual Eligibility And Approval

by Gustan Cho

The U.S. Department of Veterans Affairs (VA) is the federal government agency governing VA loans. Per VA credit score guidelines, there is no minimum credit score requirements on VA loans. All government and conventional home mortgage programs have a minimum credit score requirement. The higher the borrower’s credit scores, the lower the layered risk for mortgage lenders. The lower the risk for lenders, the lower the mortgage rates. Many borrowers often get confused about why they get different credit score requirements on VA loans when they are shopping at various mortgage companies. Some lenders may have a 620 credit score requirement while other lenders may require a 640 FICO. The fact of the matter is the Veterans Administration has no minimum credit score requirements on VA loans.

There Are No Minimum Credit Score Requirements On VA Loans

So why do lenders require certain credit score requirements on VA loans?  This is because lenders can higher lending requirements called lender overlays on VA loans. What are lender overlays?  All lenders need to have their borrowers the minimum VA Agency Guidelines. VA loans are the best mortgage program in the nation. However, not all borrowers are eligible to qualify for VA loans. Only active and/or retired members of the U.S. Armed Services with a valid certificate of eligibility are eligible to qualify for VA loans. However, lenders have their own higher lending requirements called lender overlays. Most lenders have higher lending requirements because they want to minimize the credit risks they take on. Most lenders do have lender overlays. However, Gustan Cho Associates dba Capital Lending Network, Inc. does not have any lender overlays on VA loans. Capital Lending Network, Inc. has zero lender overlays on government and conventional loans. We just go off the automated findings of the automated underwriting system (AUS) and have zero overlays.

VA Credit Score Agency Mortgage Guidelines

VA Credit Score Agency Mortgage

The Veterans Administration is the federal agency that is in charge of VA loans. It sets the agency lending guidelines on VA mortgages. VA loans have the most lenient lending guidelines than any other loan program. The federal government has created and launched VA loans many decades ago to reward the men and women who served our country. Members of the military have always had lower credit profiles than their civilian counterparts. Statistics have always shown military members always had lower credit scores versus civilians because of their constant base transfers and due to their deployment. Our government kept this data in mind when creating and launching VA Agency Mortgage Guidelines. This is one of the reasons why there are no credit score requirements on VA loans.

The Importance Of Getting An Automated Approval

The key to getting an approve/eligible per automated underwriting system is timely payments in the past 12 months. As long as borrowers can get an approve/eligible per automated underwriting system (AUS), there are no minimum credit score requirements on VA loans. This also holds true on the debt to income ratio. There is no maximum debt to income ratio caps on VA loans as long as borrowers can get an approve/eligible per automated underwriting system (AUS). Capital Lending Network, Inc. has helped countless borrowers get approved (approve/eligible per AUS) and closed on their VA loans with credit scores under 600 FICO and debt to income ratio over 60% DTI. Capital Lending Network is one of the very few mortgage companies with no lender overlays on VA loans. Capital Lending Network, Inc. has a national reputation of being able to do other lenders cannot due to its no lender overlays on government and conventional loans.

VA Credit Score Guidelines Versus Lender Overlays

All lenders need to make sure borrowers meet the minimum VA Agency Mortgage Guidelines. However, lenders can have higher lending guidelines that are above and beyond the minimum VA Agency Guidelines which are called lender overlays. Most lenders do have lender overlays. Lenders are allowed to have lender overlays on just about anything. Most lenders do have lender overlays on credit scores. When a lender requires a 620 or 640 credit score on VA loans, the lender has lender overlays on credit scores.

VA Loan Approval With Low Credit Scores: 500 to 620 FICO

Over 40% of our borrowers at Capital Lending Network, Inc. are VA borrowers with under 600 credit scores. VA does not require a minimum credit score requirement on VA loans. For example, if a borrower gets denied by a mortgage lender because they do not have a 640 credit score, the borrower may meet all VA Agency Guidelines and qualify for a VA loan but not qualify for a VA loan with that particular lender. Not all lenders have the same mortgage guidelines on VA loans. Just because a borrower is told they do not qualify for a VA loan at one lender may not mean they do not qualify for a VA loan at a different lender. Capital Lending Network, Inc. has zero lender overlays on VA loans. As long as you can get an approve/eligible per automated underwriting system (AUS), you can qualify, get approved, and close on your VA loan at Capital Lending Network, Inc.

Key In Getting An Approve/Eligible Per Automated Underwriting System (AUS)

Getting An Approve/Eligible Per Automated Underwriting System

Getting an automated approval per AUS is key to qualifying for a VA loan with lower credit scores. As mentioned in the earlier paragraphs of this article, VA loans do not have a minimum credit score requirement. However, you need an approve/eligible per automated underwriting system. For borrowers who cannot get an approve/eligible per AUS but get a refer/eligible per AUS may become eligible to qualify for VA loans with manual underwriting. However, manual underwriting guidelines apply. On manual underwriting, you need to have timely payments in the past 24 months. We will discuss manual versus automated underwriting in the next paragraph. You can get an approve/eligible per automated underwriting system (AUS) on VA loans with lower credit scores, outstanding collections/charged-off accounts, and other prior bad credit. However, in order for the automated underwriting system (AUS) to render an approve/eligible, the borrower will need timely payments in the past 12 months. Late payments in the past 12 months are normally deal killers for borrowers to get an approve/eligible per automated underwriting system. One or two late payments in the past 12 months is not always a deal killer. However, it will be very difficult to get an approve/eligible per AUS with multiple late payments in the past 12 months on VA loans.

Manual Versus Automated Underwriting System

Borrowers who have a refer versus an approve/eligible per automated underwriting system (AUS) can qualify for a VA loan with manual underwriting. Manual underwriting means the automated underwriting system does not have enough detailed data to render an approve/eligible per AUS but the borrower may be eligible for a VA loan but the file needs to be downgraded to a manual underwrite. Manual underwriting is when the file is carefully reviewed by a human mortgage underwriter. Manual underwriting guidelines apply. Not all lenders do manual underwriting. However, Capital Lending Network, Inc. are experts in manual underwriting on VA and FHA Loans. VA and FHA loans are the only two mortgage programs that allow manual underwriting.  A large percentage of our borrowers at Capital Lending Network, Inc. are under manual underwriting.

4 comments

You may also like

4 comments

Rita Hancock December 17, 2020 - 12:23 am

Have $3,310 a month in income. Credit scores are 622-574-555. Looking to buy a house within 6 months if possible

Reply
Gustan Cho December 17, 2020 - 2:39 am

Let’s try to get your MIDDLE credit score to 580 FICO. Please go to http://www.capitallendingnetwork.com and click resources. Then read the REBUILD YOUR CREDIT and BOOST YOUR CREDIT WITH INSTANT CREDIT. Those two credit repair guidelines will skyrocket your credit scores.

Reply
Wendy Jacobsen December 17, 2020 - 3:11 am

We need to get qualified for a mortgage with bad credit and self employment

Reply
Isabel Namura December 17, 2020 - 3:12 am

Ok so I am Jody my significant other is Hansford! Trying for 2years and getting approved by bank we go get a home and under a beautiful contract! Being blessed and fortunate enough to stay in hotels and motels due to his career we are homeless and we have now been unapproved by his bank and he makes 100,000 dollars a year and we literally have one payment on a hummer loan $204 and a few more it’s paid off! That being said we have a 10 percent down payment and a very credible co signer and if by chance you have any sources of opportunity and or helpful information and think you can help us out in anyway please give us a call please 4239121531 or text I get a lot of spam ! Thank you very much! Hopefully you will get us some sort of guidance on how to make this happen! Devastated wasn’t the word nor have a hurtful letdown as this has got to me in a very long time! We have no issues with being able to pay for this home! Please help

Reply

Leave a Comment