VA Agency Guidelines Versus Mortgage Overlays By Lenders

ByMichael Gracz
What are the VA agency guidelines and mortgage overlays

This Article Is About VA Agency Guidelines Versus Mortgage Overlays By Lenders

The Department Of Veterans Affairs (The VA) is the federal agency that sets VA Mortgage Guidelines.

  • VA Loans is the best home loan program available in the United States
  • However, not everyone can qualify for VA Loans
  • To be eligible, borrowers need to be active and/or retired members of the U.S. Armed Services with a valid Certificate Of Eligibility (COE)
  • The VA does not originate, fund, or service VA Loans
  • Private lenders who are approved by the VA originate and fund VA Mortgages
  • The role of the Department of Veterans Affairs (the VA) is to partially guarantee the lender the loss sustained in the event a borrower defaults and forecloses on their VA Loans
  • Due to this VA guarantee, lenders can offer eligible borrowers VA Loans with 100% financing at very low mortgage rates

Difference Between VA Agency Guidelines Versus Mortgage Overlays


What is the difference between VA Agency Guidelines Versus Mortgage Overlays?

  • All lenders need to meet the minimum federal VA Agency Guidelines set forth by the Department of Veterans Affairs
  • However, lenders can have their own lending requirements that are above and beyond those of the VA
  • These higher mortgage lending guidelines required by lenders that are above and beyond those of the VA is called lender overlays
  • This is why not all lenders have the same mortgage lending guidelines on VA Loans
  • Gustan Cho Associates is one of the very few national direct lenders that have no lender overlays on VA Loans
  • We just go off the minimum VA Agency Guidelines

As long as the borrower has an approve/eligible per the automated underwriting system (AUS), the borrower is set to go at Gustan Cho Associates.

Why Lenders Have Different VA Guidelines?

Over 75% of our borrowers at Gustan Cho Associates are folks who could not qualify for VA Loans at other lenders due to their lender overlays. Alex Carlucci, a senior loan officer at Gustan Cho Associates, is one of our top experts on VA Loans.

Gustan Cho Associates Mortgage Group is one of the very few national lenders with no overlays on government and conventional loans. If a borrower can get an approve/eligible per AUS with a 500 FICO and 60% DTI, we can approve and close the loan. We have zero overlays and will just go off the automated findings.

Common Lender Overlays Imposed By Lenders

What are the typical lender caps by lenders

The VA has lenient mortgage guidelines.

  • There are no minimum credit score requirements on VA Home Loans
  • There is no maximum debt to income ratio requirements
  • The VA recently announced they have eliminated maximum loan limits on VA Loans
  • So borrowers can qualify for $1 plus million dollar VA Loans

We have closed borrowers with 500 credit scores and 60% debt to income ratios. As long as you can get an approved/eligible per automated underwriting system and can meet the conditions, we will not just close on your VA Loan but will close it on time.

Qualifying For A VA Loan With A Direct Lender With No Overlays

Not all lenders have the same VA Guidelines. Borrowers with less than perfect credit need to understand the VA Agency Guidelines Versus Mortgage Overlays. Just because one lender says no does not mean the borrower cannot qualify for a VA Loan with another lender:

  • Many borrowers are told they need a 620 to 640 credit score to qualify
  • This is not the case
  • The VA has no minimum credit score requirement
  • However, lenders can impose their own minimum credit score requirement
  • The VA does not have a maximum debt to income ratio cap
  • However, many lenders will require borrowers not to exceed 41% to 50% debt to income ratio
  • Outstanding collections and charged-off accounts do not have to be paid to qualify for VA Loans
  • Gustan Cho Associates has no minimum credit score requirement nor maximum DTI Caps on VA Mortgages

Gustan Cho Associates is a mortgage company licensed in multiple states with no overlays on VA Loans.

Minimum VA Agency Guidelines Versus Mortgage Overlays

Here are the minimum VA Agency Mortgage Guidelines:

  • There is a two-year waiting period after Chapter 7 Bankruptcy, foreclosure, deed in lieu of foreclosure, short-sale to qualify for VA Loans
  • Borrowers can qualify for VA Loans during Chapter 13 Bankruptcy Repayment Plan after a 12-month satisfactory payment history with Bankruptcy Court Trustee Approval
  • There is no minimum credit score requirement
  • There is no maximum debt to income ratio requirement
  • There is no maximum loan limit on VA Loans
  • Outstanding collections and charged-off accounts do not have to be paid

For more information about the content of this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The Team at Gustan Cho Associates Mortgage Group is available 7 days a week, evenings, weekends, and holidays.

This ARTICLE On VA Agency Guidelines Versus Mortgage Overlays Was UPDATED On April 30th, 2021.

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