VA Loans, Underwriters and Possible Denial Explanations

At Primary Residential Mortgage, it’s our distinct pleasure and pride to offer VA loan products as one of several mortgage types available in our offices. These loans, backed by the US government’s Department of Veteran’s Affairs and meant for veterans, active service personal and military families, allows for great mortgage ratees and zero-down-payment options for those who have served our country and their families.

While qualification methods and thresholds for VA loans tend to be relatively open for those who qualify as service members (past or present), there are just a few cases where an application for a VA loan may be rejected. Most of these relate to the underwriter involved in the application – today’s blog will go over everything you need to know here.

Underwriter Basics

In any mortgage application, an underwriter is a third party whose job is to evaluate the specific financial numbers of the potential loan in question to help both clients and lenders understand potential risk. The underwriter looks over the loan file and evaluates your financial picture, ensuring you meet all the requirements for the loan you’re applying for. They also look through your previous credit and loan history to determine whether you’re a safe bet to repay the funds in question.

Possible Reasons for VA Loan Rejection

Here are some of the reasons why an underwriter might reject a VA loan application:

• Credit change: As part of the underwriting process, the underwriter will verify your credit. If you have poor credit history, such as a default on an old loan, numerous late payments or even large amounts of recent debt taken on, these could be viewed as red flags and the application might be rejected. If possible, do not take out any new credit and limit your spending during the application period.
• Employment change: Once the application process has begun, do everything in your power to maintain employment. Underwriters may view certain employment changes as unreliable sources of income. If a job change cannot be avoided, speak to your loan officer about new documentation or verification of income.
• Errors: In simpler cases, VA loans may be rejected because you made a mistake on the documents somewhere. Underwriters have to be perfectionists, so you need every detail to be correct, especially sources of income and debts.
• Automation: In some cases, automated underwriting systems may spit out rejections based on issues with inputs or past credit issues.

Stay in Touch

Our best piece of advice here: Once your VA loan application is submitted, keep in touch with your underwriter. Promptly respond to any requests for additional documents or financial statements, plus ensure you understand everything you’re being asked for.

For more on underwriters and VA loans, or to learn about any of our other mortgage loan products or services, speak to the staff at Primary Residential Mortgage today.

*PRMI NMLS 3094. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification. This is not a commitment to lend. Opinions expressed are solely my own and do not express the views of my employer.