Can you be denied a VA home loan? While it’s less likely than with other types of home loans, it is possible. Being denied a VA home loan is hardly the end, and like homeownership itself, the loan approval process can take some maneuvering.
At Thank You Heroes, we help active military, veterans, and other pillars of society in Southern California cut through the home loan process in the most advantageous way. Here, we’ll discuss the most common reasons a VA home loan is denied. Then, we’ll cover the services that have the best outcomes for those denied a VA home loan.
Common Reasons VA Loans are Denied
If you’ve recently gotten disappointing feedback from a mortgage lender, you’re likely wondering, “How can you be denied a VA home loan when you’re a qualified veteran or servicemember?” The answer depends on the VA Loan Certificate of Eligibility, meaning there can be a handful of reasons for a denied VA home loan, including but not limited to:
- Poor credit
- Significant changes in credit
- Income outside the qualification range
- High debt-to-income ratio
- Inconsistent employment history
- Other factors outside your control (e.g., a private mortgage lender choosing to reduce or end participation in the VA loan program)
The positive side is that there are just as many things you can do to not only requalify but possibly even secure a better loan term, interest rate, or VA rebate. As with most things, the best outcome depends on working with those whose interests are most firmly aligned with yours.
What Can You Do if Your Loan is Denied?
There are many things you can do to secure a new VA home loan and obtain the highest VA rebate. Even if you’ve received several application denials, nothing is stopping you from adjusting your affairs and applying again, perhaps elsewhere that’s much more yielding to your particular qualifications.
Because VA home loans follow a more straightforward process, applicants have the advantage of more time to spend on other important factors in getting the best loan for them. This makes it much easier for VA loan applicants to focus on getting the lowest possible interest rates and most advantageous terms, especially by working closely with a qualified Thank You Heroes loan specialist.
Also, you don’t have to use a particular VA loan once. A Thank You Heroes agent can help you take what you’ve already earned and leverage it to obtain the highest value from a new home. We also dramatically improve the outcome of home sales for our members. Together, we help veterans, service members, and their families get a roof over their heads they and their loved ones can be proud of for years to come.
At Thank You Heroes, we support our eligible members in a variety of ways:
- Up to 100% closing costs, fully covered
- A minimum of 10% cash-back commission goes back to you
- Guaranteed home sale, or we’ll buy the house
- Up to 20% of all Thank You Heroes commissions are donated to other heroes
- A safe place for servicemembers, veterans, first responders, teachers, healthcare workers, and clergy to receive home-buying and -selling support with integrity and faith in all dealings
Secure your VA Loan and Achieve Homeownership with Thank You Heroes
For those who’ve risked it all to protect us, we’re humbled to play this small role in your journey. Thank You Heroes is honored to provide home loan assistance for veterans and military personnel and help secure the safest, most affordable VA home loans in the communities they gave everything for.
Even though you can be denied a VA home loan, it has one of the lowest likelihoods of any type of loan. No matter what stage of the application process you’re on, we invite you to join our program and let Thank You Heroes guide you through your homeownership journey. Contact us with any questions about our zero-cost home buying and selling program for military personnel throughout Southern California and the surrounding area.
Image Credits: Alina Nikitaeva // Shutterstock
FAQs
A common hurdle for many self-employed VA loan borrowers stems from inconsistency in their income. Remember, the underwriter is here to verify you can repay the loan. If your tax returns show an insufficient amount or heavily fluctuating income, it can trigger additional scrutiny or a denial.
What will cause a VA loan to get disapproved? ›
A common hurdle for many self-employed VA loan borrowers stems from inconsistency in their income. Remember, the underwriter is here to verify you can repay the loan. If your tax returns show an insufficient amount or heavily fluctuating income, it can trigger additional scrutiny or a denial.
What can disqualify you from a VA loan? ›
If you've received an other than honorable, bad conduct, or dishonorable discharge, you may not be eligible for VA benefits.
Why would a VA loan be denied? ›
One of the most common reasons VA loan denied is application errors. Failing to provide accurate and complete information on your loan application can raise red flags for underwriters. Double-check all the information you provide and make sure it matches your supporting documents.
What are red flags for VA loan? ›
Red flags include the presence of radon gas, asbestos or lead-based paint within the home, or properties located in a flood zone, near a sinkhole, or proximity to any type of environmental contamination.
Why are most VA claims denied? ›
VA denies claims when the care was not preauthorized, and the Veteran does not meet eligibility requirements for emergency care. VA rejects claims that cannot be paid or denied due to billing errors or the need for additional information.
What would stop a VA loan from being approved? ›
You must meet your lender's minimum or standards of credit, income, and any other requirements to approve a loan. VA does NOT require a minimum credit score, but most lenders will use a credit score to help determine your interest rate and to lower risk.
Are VA loans hard to get approved? ›
Since VA lenders are more protected when funding this type of loan, they are more willing to approve borrowers with low credit scores. That's why there's no official credit requirement, though individual lenders may set one.
Does VA loan look at income? ›
By law, VA may only guarantee a loan when it is possible to determine that the Veteran is a satisfactory credit risk, and has present or verified anticipated income that bears a proper relation to the anticipated terms of repayment. VA's underwriting standards are incorporated into VA regulations at 38 C.F.R.
What is the lowest credit score for a VA loan? ›
The VA doesn't set a minimum credit score for VA loans at the program level. Instead, the VA relies on lenders to ensure borrowers are a satisfactory credit risk. VA lenders typically require a FICO score of at least 620. High loan amounts, such as those exceeding $1 million, may require a higher credit score.
For all purchases, according to Ellie Mae, 74.3 percent of VA loans closed, compared to 74.1 percent of all mortgages. Conventional (non-government did slightly better than VA, with a 75.2 percent closure rate. In short, VA mortgages will close at a high rate and are less likely than the average loan to fail to close.
Why won t some sellers accept VA loans? ›
Unfortunately, some sellers may hold preconceived notions about VA borrowers that are not based on facts. For example, they may believe that VA buyers are less financially stable or responsible than those using conventional loans. This bias can lead to hesitation in accepting VA offers.
Why would a house not pass for VA loan? ›
Appraisers must note any damage caused by termites, wood-destroying insects, pest infestation, dry rot or any other defects that cause structural issues with the home. The appraiser must look for issues that could make the home less stable and/or put the occupants in harm's way.
How much debt is too much for a VA loan? ›
The debt-to-income ratio determines if you can qualify for VA loans. The acceptable debt-to-income ratio for a VA loan is 41%. Generally, debt-to-income ratio refers to the percentage of your gross monthly income that goes towards debts.
What fails a VA appraisal? ›
There are many reasons why a home may fail the VA appraisal. Common reasons include major issues with the foundation, roof, electrical systems, plumbing, and heating systems. Missing handrails and chipping paint can also cause appraisal issues.
What do VA lenders look for on bank statements? ›
Lenders look at bank statements to make sure there's enough money in your accounts to cover your closing. That's the initial reason for bank statements. Another reason is to compare the dates listed on pay stubs with an accompanying deposit it the bank account.
How often are VA benefits denied? ›
Are VA Claim Denials Common? Unfortunately, VA disability claim denials are not uncommon, with roughly a third of veterans getting rejected each year. The Department of Veterans Affairs (VA) operates under strict guidelines to ensure that only veterans with genuine claims get the help they need.
