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Was Your VA Home Loan Declined? Don’t Take No For An Answer

If your VA loan was denied, it’s possible that your loan officer made a mistake or the lender does not do manual underwriting on VA loans.

VA underwriting guidelines are for the most part written to give an underwriter every opportunity to build a case for extending credit to qualified Veterans, and this move made it a little harder.

In some cases, you will not get an automated underwriting approval, but that does not mean that you are not still eligible for a VA loan.

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Automated vs. Manual Underwriting

Automated underwriting is an online portal that a lender uses to upload the loan application, income, assets, reserves and all other vital qualifying criteria and it spits out a conditional approval or declines the application along with an explanation of why.

Manual Underwriting is available when you are unable to get an automated underwriting approval.  A manual underwrite simply means that the automated method is ignored, and an underwriter will physically review all of your documentation and determine if you are eligible for a VA loan.

This is also common with FHA mortgages, but unavailable for conventional financing.

My VA Loan Was Denied

A loan can be denied by the automated underwriting system for any number of reasons.  It could be that something was input wrong.  It could be because something was reported wrong on your credit.

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It could be because there was a credit issue in the past that requires that your loan be automatically downgraded to a manual underwrite.

In any case, VA loans offer a lot of flexibility and options.  Just because you are unable to get an automated underwriting approval doesn’t mean you are not eligible for a VA guaranteed loan.

Manual Underwriting is the Answer

Manual underwriting is a different story.  Manual underwriting means that a VA home loan underwriter has to physically calculate debt to income ratios, qualifying disposable income requirements, past rental payment history to name a few.

There are no exceptions with manual underwriting.  Debt to income ratios strictly limit all of your monthly expenses, including proposed housing expenses to 41% of your gross monthly income.

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This is pretty tight in terms of qualifying for a home loan when you consider that FHA DTI will allow up to 56% and conventional DTI 50%.

Don’t Take No For An Answer

If your lender is not approved to do manual underwriting on VA home loans, you may be told you’re not approved without further explanation or options.

Should this happen, ask your lender if they are able to manually underwrite VA loans.  It’s much more work for the lender and the underwriter, and may require much more documentation from you, the borrower – but don’t take NO for an answer.

Find a lender that is willing to fight for you and manually underwrite your VA home loan.  We are out there and don’t mind working extra hard to qualify Veterans for home loans.

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My biggest fear is that when things get harder to do, some lenders will be unwilling to put in the extra time and energy to fight for you.  We’re not one of those lenders.

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About Your Expert

Scott Schang

A 20 year veteran of the Mortgage and Real Estate industry, I am passionate about educating and empowering consumers. I have been writing about consumer protection issues, and making sense of complicated real estate and mortgage topics on this website since 2007

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  • Dave aponte says:

    I was told that having two or more late within a 24 month period will not get you approved. I had a home that almost go into a foreclosure. The home sold preventing the foreclosure. Please advise. Credit score 639.

    • Scott Schang says:

      Hi Dave, thank you for your question. This is not necessarily the case, especially when it comes to your home loan benefit as an eligible Veteran of the armed services. Underwriters would be critical if there was clear a pattern of irresponsibility or purposeful negligence, but tough times fall on good people all the time. VA more than any other loan program is willing to consider the circumstances and if you are unable to get an automated underwriting approval, they may consider approving your loan under manual underwriting guidelines.

      I would recommend you get you a second opinion from someone who is passionate about helping Veterans take advantage of their benefits. I do not know the specifics of your situation, and the time that has passed since the lates, and the circumstances that led up to the lates will all be considered. I’ve very glad you did not take “no” for an answer.

      If you would like, please send me an email to scott@findmywayhome.com and I can introduce you to someone that I know and trust that is passionate about helping Veterans. Please include the State you’re buying in and I’m happy to make that connection.

      THANK YOU for your Service, I hope this helps?

  • Francisco A. Gonzalez says:

    Hi, I was deny from the underwriter because I was 30 days late on a payment going back FEB 2019. The reason of the latest was that another mortage company purchase another and I had not receice a letter where to send the payment too? Finally when I got the correct address etc to send the payment I was never late. Just because of that, Now I have to wait 90 days to re applied my paper to refin/ loan. I think this is not fair . I dont know what to do or Who can I call to help me?

    • Scott Schang says:

      Francisco, I’m so sorry to hear that you’re having these challenges. It’s possible that you are unable to get an automated underwriting approval, and it’s also possible that the loan officer or lender you are working with simply does not know how to get to the bottom of this. It’s not at all unusual for these “popular” VA lender types to simply be a call center that does not really care about fighting for Veterans to help them receive their benefits. I wish this were not true, but I see it almost every day.

      Do me a favor? Please send me an email to Scott@findmywayhome.com and let me know what State you’re in. I can introduce you to someone that I know and trust that will exhaust all of your options and fight hard to help you correct this situation.

      I had a very similar situation to this in the past. It was a lot of work, but we were able to document the mistake, correct it, and help the Veteran receive their home loan benefit.

      Thank you for your Service! I hope this helps?

  • Timbattle3555@yahoo.com says:

    Have recently made installment payment plan for back taxes can I be denied from closing

    • Scott Schang says:

      Making payments on back taxes would not prevent you from qualifying for a VA loan. If your lender or loan officer is telling you that it you do not qualify because of this payment plan, you need to get a second opinion. If you would like an introduction to an experienced VA loan officer, shoot me an email to scott@findmywayhome.com and I will make that connection. Please include what State you’re buying in.

      Hope this helps?

  • Timbattle3555@yahoo.com says:

    Can a tax lein get your va loan denial even you have a payment plan thanks Tony