At VIP Mortgage Inc., we’re proud to provide VA loans backed by the US Department of Veterans Affairs for service members, veterans and spouses as one of our many mortgage loan programs. VA loans provide zero-down-payment options and fantastic mortgage rates to those who have served our country, allowing them to return home to a comfortable situation both financially and practically.
Like with virtually every other mortgage type out there, VA loans will be reviewed by an underwriter, whose job it is to evaluate exposure and risk for lenders. The underwriter is tasked with reviewing all your financial details and determining whether you meet the requirements of a given loan, plus determining whether your history makes you a safe bet to repay a given loan. And while requirements on VA loans are relatively relaxed in several areas for qualifying service members, there are still a few reasons why these applications might be rejected by an underwriter – let’s look at these and help you ensure you’re never put in this position.
The single most common reason why VA loan applications are rejected is because errors were made on the documents themselves. Underwriters are hired to be perfectionists at every turn, inspecting the fine details of the application. You have to be extremely clear about everything from outstanding debts to your source of income, the size of your family and the history of your military service. Errors could lead to delays in the process or even a rejected application.
While VA loans do indeed have relaxed standards compared to some other options, they still require certain thresholds for credit score and history. The underwriter will verify your credit before approving your loan, and you should avoid any major changes to credit in the near term while applying – don’t take out any new accounts during this period, for instance, or make any big purchases that change your debt-to-income ratio in a big way.
If at all possible, we highly recommend maintaining consistent employment throughout the application process. A change to your situation during this process may lead to a situation where the underwriter questions whether the new income you receive is reliable due to the limited history. If you cannot avoid a change in employment during this time, speak to your loan officer about preparing and verifying the proper documentation.
Finally, in rare cases, a system called automated underwriting is sometimes used for online verification of loan criteria and the application. Certain systems may reject applications based on incorrect inputs or past credit issues, in which case you may have to inquire about manual underwriting if you believe this rejection to be in error.
For more on why an underwriter may reject a VA loan application, or for information on any of our mortgage loan programs, speak to the staff at VIP Mortgage Inc. today.