Manually Underwritten VA Loans
What’s a VA Manual Underwritten Loan?
When applying for a VA loan, you might be told a minimum credit score of 620, 600, or 580 is required, or that your debt-to-income ratio must be no more than 41%. This is likely because your lender did not receive automated approval from Fannie Mae and Freddie Mac underwriting systems.
What is a Manually Underwritten VA Loan?
A manually underwritten VA loan occurs when automated approval from Fannie Mae and Freddie Mac systems is not received. These loans can take extra time and effort to close, which is why many lenders avoid them.
We Can Close Your VA Manually Underwritten Loan
While a manually underwritten VA loan requires additional time and paperwork, we only require a 500 minimum credit score if you meet the following criteria:
Keys to a Manual Underwritten VA Loan
- 24 months on-time rent history: No late payments over 30 days.
- Cancelled checks (unless confirmed by a third-party management company)
- Third-party management company
- Rent-free living with family
- Credit History:
- No late payments in the past 12 months (isolated instances may be acceptable)
- Charged-off or collections accounts in the past 24 months require a Letter of Explanation (LOE)
- LOE detailing the reason for delinquent credit and how to prevent it in the future
Compensating Factors
- Conservative use of consumer credit
- Minimal consumer debt
- Long-term employment
- Significant liquid assets
- Sizable down-payment
- Equity in refinancing loans
- Little or no increase in shelter expenses
- Military benefits
- High residual income
- Low debt-to-income ratio
Final Thoughts
Ensure you work with a Loan Officer and Lender experienced in manually underwritten VA loans. Even if you meet all VA manual underwriting criteria, the loan must still be underwritten by a VA Underwriter who will weigh all risks and compensating factors to make the final loan decision.
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VA Loan – Manual Underwrite – 500 Minimum Score
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