VA Loan Requirements

[Anonymous]

So I has some questions about VA Home Loan Requirments since I have read the ch 4 Underwriter guidelines and can find any definate answers.

I applied for a VA loan with a trusted lender thinking he would comeback and give me some things to work on instead to my surprise I got a preapproval, I have has a couple lates on 2 creditlines in the last 12 Months due to oversight with very busy schedule and one had an error with autopay. 2017 was a rough year, I had a commission job and was out due to a medical issue about 6 months of the year and trying to stay ontop of everything was difficult, once returning to work at the beginning of 2017 I got everything squared back away, So the last 9 months have been good. 

So I asked questions ot the LO and said he didn't have any worries which made me feel at ease. So found a great house, and we have gone through all the motions just waiting on VA Apprasial on Clear to Close from the underwriter.

The LO and Processer havent said anything about the lates, just wanted the LOE for them even when asked just said I needed a good reason for them. I was honest and even provided my FMLA paperwork which they were happy about. My DTI is in check, My income is good, and I never missed a Mortgage payment in the 8 years ive been a homeowner which is something I hear they look at closer.

So I keep seeing this as a VA loan requirment places: "No more than one late payment in the last 12 months" but in reading the VA Underwriting Guidelines I can't find that rule anywhere except if you have had a major credit issue you have to have 12 clean months. i.e. Ch13, 90+day late, Collection, or Judgement, missed mortgage payment, none of which I have. It does says that the borrower must have to show good use of creditworthiness. So I would love to get some professional clairty on this as it has made me nervious about getting clear to close. I really need this move to cut my commute from 1.5hr to about 30min each way, it has been getting very old recently. Thanks!

[MauiMan85297]

1x30 in the last 12 months refers to your mortgage payment, if you're talking about missed CC's or loan payments (incl auto) then it is Subject to individual evaluation and overall pattern of credit behavior.  You should be fine if all else falls into place.

[Anonymous]

Thank you for your clarification, seems to be some confusing info running around about this.

[homeloanexpert]

The AUS (automated underwriting system) will determine your fate. The AUS sees the 1 x 30 day but factors it with the overall credit picture. I have been able to over a single late but not multiple lates within the last 12 months. No mortgage late payments on a VA loan.

[VALoanMaster]

Hi Cotton2730,

There are a couple reason why there is so much confusion about this.

1) The guidelines are a little ambiguous. See the actual guidelines below:

2) Lenders add their own requirements (overlays) on top of the VA guidelines.

3) The VA guidelines differ depending on whether or not the lender has to do a manual underwrite.

4) The guidelines are different if you've gone through a major, adverse credit issue like a bankruptcy or foreclosure.

Here is the base for the VA credit guidelines:

c. How to Analyze Credit

The applicant's past repayment practices on obligations are the best indicator of his or her willingness to repay future obligations.  Emphasis should be on the applicant's overall payment patterns rather than isolated occurrences of unsatisfactory repayment.  Determine whether the applicant (and spouse, if applicable) is a satisfactory credit risk based on a careful analysis of the credit report and other credit data. Rent and Mortgage Payment History The applicant's rental history and any outstanding, assumed, or recently retired mortgages must be verified and rated. Housing expense payment history is often the best indicator of how motivated the applicant is to make timely mortgage payments in the future.

There is nothing in the guidelines that specifically says you cannot have more than one 30 day late on a credit card in the last 12 months except when you've had a major credit issue like a bk, foreclosure or you had a stretch of bad credit with multiple lates/collections or charge-offs. Then the section of the guidelines for reestablishing credit kick in which states that you need to have a clean 12 month history.

Now lets look at the guidelines for a manual underwrite.

Verification of significant nonmortgage debt (section 5 of this chapter)

Obtain direct verification for significant debts not reported on the credit report. Note:  Significant means that the debt has a monthly payment exceeding 2 percent of the stable monthly income for all borrowers.

Same as Refer. Note:  Perform manual downgrade to Refer if direct verification reveals more than 1 by 30 day late payment in the past 12 months for any of the omitted debts.

Subject and Reference	Documentation Classification
Documentation Guidelines and Reductions for Refer	Additional Documentation Reductions for Accept/Approve
Mortgage payment history (section 7 of this chapter)	Obtain direct verification when ratings are not available on mortgages that are any of the following: ·   outstanding, ·   assumed, or ·   recently retired. A written explanation of mortgage payment history is required for borrowers with more than 1 by 30 day late payment for all mortgages for the past 12 months.	Perform manual downgrade to Refer for any mortgage debt with more than 1 by 30 day late payment in the past 12 months.

As long as your lender has an automated approval & no overlays, you're going to be fine.

Good luck.

[Anonymous]

So AUS gave an approval but still needs to be reviewed by the underwriter, figures crossed....