VA Loan Underwriting Question

Anonymous · ‎06-23-2015

Hi everyone,

We recently applied for a VA loan. About 2 months before we applied I took out a personal loan of $12,000 to pay off some medical debt and collections. When I took out the loan, we had decided that we weren’t going to apply for a mortgage for another year so I didn’t think much of it, I had planned to have it paid off before that year. Anyways, because of a few circumstances, we ended up needing to apply sooner. The loan is not on my credit yet, but I did disclose the amount and monthly payment in the application. The deposit is also showing on the bank statements that I gave them. It is being included in my debt to income ration and I am still under the required amount. The lender said our scores are where they need to be and has submitted it for underwriting.

I am just wondering, will this hurt me during underwriting? Will I get denied because of the loan?

Thank you for your help!!!

Anonymous · ‎06-23-2015

There is no reason your personal loan would affect your VA loan approval as long as you meet the DTI and residual income requirements for your household. I wouldn't worry about it.

Anonymous · ‎06-23-2015

Thank you for the quick reply!

I was just worried, because everything I read says not to take out new loans before applying for a mortgage.

I am much less nervous now!

Anonymous · ‎06-23-2015

You're welcome. I just closed a VA loan myself and it's definitely nerve wracking!

merc64 · ‎06-25-2015

@Anonymous wrote:
There is no reason your personal loan would affect your VA loan approval as long as you meet the DTI and residual income requirements for your household. I wouldn't worry about it.

Couldn't have said it better. You did the right thing by disclosing it and shouldn't cause you any problems outside of DTI/residual guidelines. Just went through the VA process myself...good luck!!!

frugalQ · ‎06-26-2015

The biggest reason for providing the 'don't take on new credit' advice is because the payment term can mess up your DTI, and the UW will more than likely ask for explanation. With that said, the UW is more concerned about people just packing on debt without any logical reason for it. You have a good reason for the loan, you've disclosed it to your LO, and it's not impacting your DTI. You should be golden.

congrats and Good Luck!!!