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Was Your VA Home Loan Declined? Don’t Take No For An Answer

If your VA loan was denied, it’s possible that your loan officer made a mistake or the lender does not do manual underwriting on VA loans.

VA underwriting guidelines are for the most part written to give an experienced loan officer and underwriter every opportunity to build a case for extending credit to qualified Veterans.

In some cases, you will not get an automated underwriting approval, but that does not mean that you are not still eligible for a VA loan.

Automated vs. Manual Underwriting

Automated underwriting is an online portal that a lender uses to upload the loan application, income, assets, reserves, and all other vital qualifying criteria and it spits out a conditional approval or declines the application along with an explanation of why.

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Manual Underwriting is available when you are unable to get an automated underwriting approval.  A manual underwrite simply means that the automated method is ignored, and an underwriter will physically review all of your documentation and determine if you are eligible for a VA loan.

This is also common with FHA mortgages but unavailable for conventional financing.

My VA Loan Was Denied

A loan can be denied by the automated underwriting system for any number of reasons.  It could be that something was input wrong.  It could be because something was reported wrong on your credit.

It could be because there was a credit issue in the past that requires that your loan be automatically downgraded to a manual underwrite.

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In any case, VA loans offer a lot of flexibility and options.  Just because you are unable to get an automated underwriting approval doesn’t mean you are not eligible for a VA guaranteed loan.

Manual Underwriting Might Be The Answer

Manual underwriting is a different story.  Manual underwriting means that a VA home loan underwriter has to physically calculate debt to income ratios, qualifying disposable income requirements, past rental payment history to name a few.

There are no exceptions with manual underwriting.  Debt to income ratios strictly limit all of your monthly expenses, including proposed housing expenses to 41% of your gross monthly income.

This is pretty tight in terms of qualifying for a home loan when you consider that FHA DTI will allow up to 56% and conventional DTI 50%.

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Manual underwriting does not mean that you will automatically qualify.  This option is much more strict than automated underwriting and can help in some cases.

Don’t Take No For An Answer

Manual underwriting is not a magic bullet.  In the overwhelming majority of cases, inexperienced loan officers or strict overlays are the reason for being denied for a VA loan.

If your lender is not approved to do manual underwriting on VA home loans, you may be told you’re not approved without further explanation or options.

Should this happen, ask your lender if manual underwriting is an option.  It’s much more work for the lender and the underwriter, and may require much more documentation from you, the borrower – but don’t take NO for an answer…yet.

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There are a LOT of call center lenders out there that prey on Veterans.  The risk is just far too great that an inexperienced loan officer will make a mistake that could cost you sleep, time, and money.  Experience matters.

My biggest fear is that when things get harder to do, some lenders will be unwilling to put in the extra time and energy to fight for you.  We’re are not those lenders.

About the Author

Scott Schang

A 20 year veteran of the Mortgage and Real Estate industry, I am passionate about educating and empowering consumers. I have been writing about consumer protection issues, and making sense of complicated real estate and mortgage topics on this website since 2007

Leave a Question or Comment About this Topic

  • Kay says:

    Hello I have a question, we are in the underwriting process of our loan. They asked for a dd214, so we sent that. Now they said we need to send a member service 4 dd214. Our loan officer doesnt understand why they are asking for that

  • Kaytee says:


    Thank you for this wonderful site. I am 40 days away from closing on a condo. Lender (VA United) is telling me that condo is VA approved but with conditions. Is this going to be a problem? Should I go with a different lender? I hate being hassled with minor stuff like this especially when I know a lot of people have closed using a VA loan in the community I want to move to.

    Thank you for your time. We appreciate you.


    • Scott Schang says:

      Hi Kaytee, thank you for the kind words 🙂

      The wording here is interesting. Once a condominium complex is approved by VA, it’s always approved – the approval doesn’t expire.

      Did they tell you what the “conditions” are?

      Now, if they said that your loan is approved with conditions, that would make a lot more sense. There are almost always conditions, which can include an appraisal, termite, updated documentation, or any number of things.

      What makes me most nervous here is that you were told this, then left to your own devices to search the internet for clarity.

      The lender you’re using has come up here on the site quite a few times. The first thing I would do is to look up the loan officer on the NMLS Consumer Access website.

      If your loan officer’s work history does not inspire confidence, I would get a second opinion. If you don’t know someone that you trust, shoot me an email to scott@findmywayhome.com and let me know what State you’re buying in. I can introduce you to someone that I know and trust.

      I hope this helps?

  • Gary says:

    Confused. I am retired Army and 100% disabled. Do to my injuries my family had to move to a warmer climate. My credit isn’t good and was upfront with the mortgage broker from the start. We received our pre approval 27 July 2020 and submitted an offer on a house 3 days later. After almost 60 days and closing date 5 days away. 21 September 2020 I was denied for late credit card payments on 2 cards. They were given a letter explaining this. Shouldn’t this issue have been addressed a lot sooner then 5 days from closing? Now I moved my family to Florida from Wisconsin our household goods are in pod storage. Living in a short term rental and will basically be homeless in 10 days.

    • Scott Schang says:

      Gary, first and foremost, THANK YOU for your Service. You are correct, it should not have taken 60 days for them to discover that late payments on a credit card would be an issue. That should have been a “known issue” when they pulled the credit at the very beginning.

      I am happy to introduce you to a loan officer that I know and trust who is an expert at VA underwriting guidelines and is licensed in Florida.

      If you would like an introduction, shoot me an email to scott@findmywayhome.com

      I hope this helps?

  • Leonard says:

    I’m a Veteran and I’ve experienced years of poor credit, I’m service connected 100% and SSDI. In 2015, I was forced from work because health issues and was not able to pay most bills on time. My present Experian score is 671 and my Equifax/TransUnion is 645. I’m building my credit and I’m seeking a veteran home loan in next several months. It’s only been 3 months of perfect payments. What will I need to do to qualify for a manual VA loan. I realize it’s more work but it my be an uphill battle to do a computer enter data loan request. What kind of score would I need for b VA loan

    • Scott Schang says:

      Hi Leonard, first off, thank you for your service and your sacrifice. Your credit scores are not bad, the lender is going to look at the middle score of the 3.

      Normally, I would say that those credit scores will not prevent you from qualifying for a VA loan. Today, because of the incredible amount of business that everyone is trying to process, many lenders are adding overlays that make it very difficult to get a manually underwritten loan done.

      That said, it might just take a little longer, and it will give you time to make more on-time payments and help raise your credit scores.

      I would like to introduce you to someone that I know and trust that will help you with this journey. If I can help, shoot me an email to scott@findmywayhome.com and let me know what State you’re buying in.

      I hope this helps?

  • Christopher Galan says:

    If my credit score is low, can I still get a VA Loan? USAA denied me because I didn’t meet their 640 minimum.

    • Scott Schang says:

      Christopher, thank you for this question – This is the exact reason why we built this website. VA does not have a minimum credit score requirement, but USAA chooses to discriminate against any Veteran with a 640 or lower credit score. This is called a lender overlay.

      What pains me most is that you were told you don’t meet guidelines, and not that you don’t meet THEIR restrictive guidelines.

      I am going to shoot you an email. Let me know what State you’re in and I can introduce you to a VA expert that I know and trust that does not have these restrictions.

      THANK YOU for your Service, I hope this helps.

  • Cynthia Knighten-Torrence says:

    Hi My name is Cynthia and my husband is a Veteran. We received an approval letter from our lender on June 2, 2020 stating we were approved for the VA loan. Fast forward to now, we are suppose to close on August 6, 2020. We received several emails stating no additional documents are required. Now on today(07/27/20) we received an email stating we need a side by side comparison of my husband’s supplemental income for 2019 and 2020. My husband supplemental income decreased due to Covid-19. Is it customary to approve a VA Loan in June 2020 when Covid-19 was the factor in which the State of Arkansas begin to shut down. My question can our lender disapprove the loan once it has been approve?

    • Scott Schang says:

      Hi Cynthia, first and foremost, I want to Thank You and your Husband for your Service.

      Supplemental income is typically averaged over a 2 year period. Even if that income is down now, it shouldn’t impact your overall ability to qualify.

      VA is also VERY flexible with your Debt to Income Ratio. Make sure you ask your loan officer what is going on.

      COVID has changed things for sure. The VA does not want to put you into a loan that you cannot afford, that is the reason for the income review.

      Your loan can absolutely be disapproved all the way up until it funds. Your approval is conditional until it’s closed.

      If you are concerned about your loan officer or lender, I can introduce you to someone that I know and trust for a second opinion.

      If you would like, shoot me an email to scott@findmywayhome.com and I can make an introduction.

      Honestly, you should be ok. Just put pressure on your loan officer to give you an answer NOW so you can change lenders if they cannot do it.

      I hope this helps?

  • Sherry Pettway says:

    Can you get a VA loan while in Chapter 13 or does it have to be discharged?

    • Scott Schang says:

      Hi Sherry, thank you for your Service and thank you for your question.

      The VA underwriting guidelines state that if you have made on-time payments for 12 months, and have permission from the Trustee or the Bankruptcy Judge, you may be able to get a VA loan while still in a Chapter 13.

      Here is the guideline from the manual:

      Bankruptcy Petition Under Chapter 13 of the Bankruptcy Code

      This type of filing indicates an effort to pay creditors. Regular payments are made
      to a court-appointed trustee over a 2 to 3-year period or, in some cases, up to 5
      years, to pay off scaled-down or entire debts.

      If the borrower(s) has finished making all payments satisfactorily, the lender may
      conclude that the borrower has re-established satisfactory credit.

      If the borrowers) has satisfactorily made at least 12 months’ worth of the payments
      and the Trustee or the Bankruptcy Judge approves of the new credit, the lender may
      give favorable consideration.

      I hope this helps?

      If you would like an introduction to a loan officer that is familiar with VA manual underwriting, you can send me an email to scott@findmywayhome.com and let me know what State you’re living in, or trying to live in.

  • Jessia English says:

    Our loan was denied in underwriting because we didn’t meet established credit history. Can you help us? We thought everything was ok. This is going to crush our kids.

    • Scott Schang says:

      Hi Jessia, I’m so sorry to hear about this. VA does allow non-traditional credit like utility bills or rental history if your credit report is not adequate.

      If you can send me an email to scott@findmywayhome.com, let me know what State you’re buying in. I can connect you with a VA loan expert that I know and trust to give you a second opinion.

      I hope this helps?