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01-01-2009 07:58 AM
01-01-2009 08:29 AM - edited 01-01-2009 08:31 AM
I'm in the final stage of the VA mortgage process right now, hopefully we'll be closing in a couple of weeks.I'll share what I've discovered.
There is no minimum score for VA loan approval. The credit guidelines are far more flexible than any other loan product currently available (even easier than FHA).
The VA specifically states there are NO reserve requirements.
The DTI can be as high as 55% with automated approval.
The only liquid assests you'll need to show are closing costs (and most of those can be paid by the seller).
Most mortgage professionals that are familiar with VA say it's a great mortgage product.
Not many banks or brokers offer VA financing, and many that do aren't really that familiar with some of the details of the process.
I can't stress the importance of using an experienced VA lender only. I found that many realtors, sellers, and lawyers have negative misconceptions about VA loans, and an experienced loan officer can reassure all the parties involved that it's not much more complicated than a conventional mortgage (a few extra forms).
You'll also be better off using a VA direct endorsement lender. They have their own VA approved underwriters, and can approve the loan without VA review. This speeds things up a lot.
Nearly everyone I spoke to when looking for a mortgage tried to convince me I should use FHA. Some even told me I didn't qualify for VA(due to a BK), but that I qualified for FHA (BS - VA has looser credit standards than FHA). I am SO glad I found a bank that does a huge amount a VA loans. Not only did I find out that I qualified easily, but it was 100% financing and the mortgage costs were much lower than FHA.
I don't want to be accused of spamming, so I'll send you the name of the bank privately. They loan in all 50 states.
Good luck! In my opinion, if you are a veteran, you can't do better than a VA loan regardless of your credit circumstances.
01-01-2009 09:37 AM
01-01-2009 09:48 AM
Sure, no problem.
Here's my understanding of how the VA views BK's:
Less than a year since discharge - Usually can't be approved (unless you have a good reason, ie, medical)
Between 1-2 years: Approveable, depending on your 'whole' picture.
2 Years or more: The Bankruptcy can be ignored for underwriting purposes.
I've sent you the info as a private message. She'll be able to give you a quick answer as to how you look for a VA loan.
01-01-2009 10:05 AM
"I live in the ***** area. Maybe she can refer me to someone."
You asked me this in the private message: Just FYI, I'm on the east coast, and this bank is in Kansas.
They loan in all 50 states. Everything was done over the phone, emails, faxes, and FedEx.
01-02-2009 12:58 PM - edited 01-02-2009 01:03 PM
There are no black & white guidelines on what gets an automated approval for a VA loan since automated underwriting takes a comprehensive analysis of your situation. Someone with a 500 score could get approved because of compensating factors (down payment, reserves, debt to income ratio) whereas someone with a 780 score could get denied (because their debt to income ratio is too high). While VA doesn't have a minimum FICO requirement, each lender may have their own (and most do), typically it's a 580 score these days. VA also doesn't require any reserves, however if your debt to income ratio is high, or your credit needs some help, reserves may make the difference between an automated approval or not. VA does have strict requirements on the duration of time that must elapse since a BK, foreclosure, the amount you can finance (eligibility needs to be adequate), down payment (if financing over $417k), and residual income though. Also, just because one doesn't get an automated approval doesn't mean that a manual approval cannot happen. Half the time that a "refer" response comes back from automated underwriting the loan can still be approved. For example someone with a Ch 13 BK discharged a few months ago, but during the 4 month repayment plan everything was paid on time, so that situation would not be approved in automated underwriting (due to the BK discharge so recent) but it would be approved by a manual underwriter who could apply some logic to the situation. Vice versa too, a loan approved in automated underwriting isn't always able to be approved if it was manually underwritten instead... for example someone who has a large down payment (20%+), OK debt to income ratio, some reserves (2 months PITI), but recent collections & charge-offs over $10k along with a past history of random negatives, wouldn't get approved by a manual underwriter due to the bad credit history... but the fact that there are compensating factors could get an automated underwriting approval. Keep in mind though even with an automated approval an underwriter can still overturn and deny the loan, everything is based on it's own merits.
You are not required to buy a home as soon as you get pre-approved, getting pre-approved just means your financing is lined up so when you do find a home you will be ready. Don't think that the "pressure is on" to find a home. Your own mortgage professional will be patient and work with you on your own terms. Credit reports (an integral part of the pre-approval) are good for 120 days on existing homes (180 days on new construction), so if you only want 1 credit check you'll need to close on the home within that amount of time of the initial credit pull.
01-03-2009 04:27 PM
You da Man, Shane!!!
That is some SERIOUSLY useful information.
The information about how long credit reports
are good for is something that I was never told.
I had no idea CR's were good for 6 months when
buying new construction. That's a lifetime these days...
Quick question: Is it customary for underwriters/loan
officers to do a soft pull before closing just to make sure
that nothing radical has occurred with someone's credit?
6 months is an awfully long time for a credit snapshot to
be valid for such a large purchase...
Thanks again, Shane. As always, your advice is priceless.
Enjoy the weekend!!!
"The right atttiude is everything"
01-03-2009 05:36 PM
FHA & VA guidelines are very, very close.
VA is a wee bit tougher since it is 100%
But most people who can get FHA will be ok VA..... just don't let VA residual income requirements bite you in the butt!!