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VA Manual Underwriting - Gaps in Employment

VA Manual Underwriting – Employment Gap

Experience Matters

Jim Duffy is one of the experts that we count on to solve underwriting challenges that our readers are facing every day.

Jim and his team specialize in understanding underwriting guidelines, and have saved many a dream home from becoming the victim of an inexperienced loan officer.

When I told Jim that we were doing a series of articles focusing on VA manual underwriting guidelines, he was eager to contribute.

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One of Jim’s specialties is recognizing when there’s an opportunity to overturn a declined automated underwriting decision, using a manual underwriting approach to save the day.

In this story, Jim’s experience allowed a Veteran to buy a home that had been turned down by multiple lenders.

Don’t Take No for an Answer

VA guaranteed home loans provide an incredible amount of flexibility when it comes to getting eligible Veterans into a home, or into a better loan.  

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The problem that many Veterans are running into is a lack of experience or expertise around the unique features of a VA loan.  In the worst case of these scenarios, eligible Veterans are being told that they do not qualify to use their VA guaranteed home loan benefit.

The damage caused by encountering an inexperienced loan officer or lender can be devastating. Especially if a Veteran gives up on their goal of owning a home after being told no.

VA Manual Underwriting Heroics

This short story perfectly makes the case for avoiding big box lenders with large call centers, and get connected with a real professional with extensive experience.

If your automated underwriting decision was approved with no issues, you could be in good shape.  There are many reasons why an automated approval is not achievable.

Manual underwriting guidelines may be used to bridge any information gaps, or reporting errors, or any other issue that make an automated approval unlikely.

Overcoming a Gap in Employment

Here’s is Jim’s story:

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“VA loans are generally very easy to qualify for, and very forgiving, with two exceptions. The VA guidelines are strict on both the Residual income calculation and the requirement to be working 2 years in the same field, or in the field that you are trained for.

So we approved a VA loan on Friday that was denied by another lender because of the latter. The veteran was just 2 months on a new job, and doing very well.

There had been significant job gaps in the past couple years, and the Veteran had worked at several employers between the gaps. So, the other lenders denied the loan.

I simply asked the question as to why.  There was a very valid explanation for the gaps in employment. The potential homebuyer was in a near fatal traffic accident, and was recouping and going through rehab.

He now has a clean bill of health and is fully recovered. So, we documented that event, and the underwriter fully understood and approved the loan.

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It is three weeks until closing on his new home, and we are just waiting on the appraisal to be transferred and title to be updated, and are ready to close.”

While Jim is a able to tell this story very succinctly, can you imagine the Veteran trying to provide for himself and his family, being told no by several lenders that simply didn’t care or didn’t know that you were eligible?

Having access to an experienced, passionate and professional loan officer on your side could be the difference between getting approved, and not.

Getting Your Questions Answered

All lenders are not created equal.  Most of the readers that find this site because they’ve been researching solutions to challenges, and have been told 10 different things by 10 different loan officers.

We’ve created this resource to help you sift through the endless opinions and articles that may, or may not directly answer your question correctly.

There are several ways to ask questions, and get expert opinions on this website.

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  • Submit a Question:  On the bottom of this page, you’ll see a prompt that allows you to ask questions.  These questions come directly to me and are answered very quickly.
  • Leave a Comment:  Below every article is the option to leave a comment or question.  We see these comments and questions in real-time and the always answered, usually pretty quickly.

In addition to researching your questions and providing you with expert advice, I can also introduce you to a lender friend that I know has experience with your specific situation and can help.

VA FP

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About Your Expert

Scott Schang

As a 19 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

Leave a Question or Comment About this Topic

  • Emmit says:

    Where do you find each amount allowed for area residual income?

    • Here you go Emmit,

      Northeast Region VA Residual Income Tables

      For Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont, the VA residual income tables are as follows :

      Family size of 1 : $450
      Family size of 2 : $755
      Family size of 3 : $909
      Family size of 4 : $1,025
      Family size of 5 : $1,062

      For each additional family member, add $80 up to a family of 7

      Midwest Region VA Residual Income Tables

      For Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin, the VA residual income tables are as follows :

      Family size of 1 : $441
      Family size of 2 : $738
      Family size of 3 : $889
      Family size of 4 : $1,003
      Family size of 5 : $1,039

      For each additional family member, add $80 up to a family of 7

      South Region VA Residual Income Tables

      For Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, Puerto Rico, South Carolina, Tennessee, Texas, Virginia, and West Virginia, the VA residual income tables are as follows:

      Family size of 1 : $441
      Family size of 2 : $738
      Family size of 3 : $889
      Family size of 4 : $1,003
      Family size of 5 : $1,039

      For each additional family member, add $80 up to a family of 7

      West Region VA Residual Income Tables

      For Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming, the VA residual income tables are as follows :

      Family size of 1 : $491
      Family size of 2 : $823
      Family size of 3 : $990
      Family size of 4 : $1,117
      Family size of 5 : $1,158

      For each additional family member, add $80 up to a family of 7

  • Emmit Collier says:

    What is the formula for residual income?

  • Emmit Collier says:

    Thanks for the information. As soon as I get my finances in order I’ll be contacting you. Again thank you.

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