VA Debt To Income Ratio Agency Mortgage Guidelines On VA Loans

by Gustan Cho

This Article Is About VA Debt To Income Ratio Agency Mortgage Guidelines On VA Loans

Many of our viewers are reading this article on VA Debt To Income Ratio Agency Mortgage Guidelines because they are getting conflicting reports by lenders on the DTI requirements on VA loans.

  • The bottom line is the Department of Veterans Affairs has no maximum debt to income ratio caps on VA loans
  • This holds true as long as borrowers can get an approve/eligible per automated underwriting system
  • To take a step further, the Veterans Administration does not have a minimum credit score requirement on VA loans
  • Again, this only holds true as long as borrowers can get an approve/eligible per AUS
  • Then why is it that lenders are requiring a 43% DTI while other lenders have a 50% DTI on debt to income ratio?
  • Are VA loans backed by the federal government?
  • Aren’t VA loans government-backed mortgage loans?
  • Why is it that lenders have different lending requirements on VA loans? 

In this article, we will discuss and cover VA Debt To Income Ratio Agency Mortgage Guidelines On VA Loans. We will explain why lenders have different lending requirements on debt to income ratio and credit score requirements.

VA Debt To Income Ratio Agency Mortgage Guidelines Versus Other Loan Programs

What are the mortgage guidelines for agencies and other loan programs

VA loans are hands down the best mortgage loan program.

  • Lenders can offer 100% financing with no down payment required and no mortgage insurance at competitive rates on VA loans due to the government guarantee
  • The Veterans Administration is the federal agency that partially guarantees losses sustained by lenders against default and/or foreclosure on VA loans
  • However, lenders need to make sure they abide by all mortgage agency guidelines of the VA on VA loans
  • Due to the government guarantee, lenders are aggressively pursuing originating and funding VA loans
  • The VA has much lenient agency mortgage guidelines than any other mortgage loan program
  • All lenders need to make sure borrowers meet the minimum agency mortgage guidelines on VA loans
  • However, lenders can have higher lending requirements that are above and beyond the minimum agency mortgage guidelines called lender overlays
  • Lender overlays are independent lending requirements that are higher than the minimum VA Agency Guidelines set by the particular mortgage lender
  • Lenders can have lender overlays on just above anything and everything
  • Most mortgage companies will require a cap on debt to income ratio on VA loans
  • This holds true even though the VA does not have a maximum debt to income ratio cap
  • This holds true for borrowers with a high debt to income ratio with an approve/eligible per automated underwriting system (AUS)
  • However, there are lenders like Capital Lending Network, Inc. that has no lender overlays on VA loans
  • CLN Mortgage Group has zero lender overlays on government and conventional loans
  • We just go off the automated underwriting system findings and have no other lender overlays

This is why not all lenders have the same lending requirements on VA loans.

Understanding VA Agency Guidelines Versus Lender Overlays

Borrowers should know the basic agency guidelines on VA loans.

  • This holds especially true for borrowers who have less than perfect credit
  • Many borrowers who get denied by a lender on a VA loan may qualify for a VA loan under VA Agency Guidelines but may not qualify with the particular lender who denied them
  • Unfortunately, many loan officers who work at mortgage companies with lender overlays may not tell them they may qualify for a VA loan with a lender with no lender overlays but not with the mortgage company where the loan officer works
  • More often than not, the loan officer may just tell the borrower they do not qualify for a VA loan
  • Just because you do not qualify for a VA loan with one lender may not necessarily mean you do not qualify for a VA loan with a different lender with no lender overlays

This is why it is very important to understand the basic VA Agency Mortgage Guidelines on VA loans. Capital Lending Network, Inc. is one of the very few mortgage lenders licensed in multiple states with no lender overlays on VA loans.

Is It Possible To Qualify For A VA Loan With High Debt To Income Ratio

Is It Possible To Qualify For A VA Loan With High Debt To Income Ratio

VA loans are the only mortgage loan program that has no debt to income ratio cap and no minimum credit score requirements. The team at Capital Lending Network, Inc. has helped countless borrowers get approved and close on VA loans with credit scores under 600 FICO and debt to income ratio higher than 60% DTI. However, the key is to get an approve/eligible per automated underwriting system. The key in getting an approve/eligible per automated underwriting system on VA loans is to be timely on all payments in the past 12 to 24 months. Late payments in the past 12 months are not viewed favorably by the automated underwriting system. Late payments after bankruptcy and/or a housing event is not viewed favorably either. Strong reserves and residual income is key in getting an automated approval via AUS on VA loans.

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