VA Application Denied - Get a second opinion

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.

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.

Why do Veterans Have to Fight so Hard for Homeownership?

CLICK HERE to watch VA loan specialists Josh Lewis, Scott Valins & Jason Sharon discuss and dispel myths around your VA Home Loan Benefit!

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%.

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.

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

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  • Gina says:

    I am in the underwriting stage for VA loan, and they are asking me if I have guardianship or conservatorship for my disabled adult child who gets SSDI since she was 16 through her father’s work history who passed away. I am the representative payee do I need to get guardianship to use her SSDI as income for my VA loan?

    • Hi Gina, I kind of need to ask some personal questions that I don’t necessarily want to post in public. For anyone else in a similar situation, legal guardianship would need to be established most likely, and that’s probably what the underwriter is asking proof of.

      Please email me directly for help with your specific situation – my email is

      I hope this helps?

  • Miles says:

    Scott, I did a search through the responses to ensure I did not replicate a comment or question. Our situation revolves around a timeshare with an approximate balance of $18000. Long story short when the government shut down for over a month in 2019 only one of us was getting paid; both were Federal employees at the time. The end result was three CC charge-offs (~$13000) and our timeshare going delinquent; it still is delinquent and impacting our credit scores. Scores are reflecting low 600’s to 650. We have recently tried to engage a lender to use the VA certificate for a home purchase in NE California; Lassen/Modoc counties. As we have only recently moved to the area we are being told it is difficult and time-consuming to purchase in this area due to lack of available funding; there being little desire to pursue business in this part of CA. The loan officer is adamant the timeshare is a realty transaction and is, therefore, a disqualifying event for a VA loan until it is paid off or current. We called the VA and they indicated it is considered consumer debt, not a realty transaction.

    We had to re-score our credit in Mid September as derogatory incorrect information was removed pushing the scores back up. The company has provided very little communication with us over the last 4 weeks with the only exception being my inquiry a week ago regarding the application. The loan said she would talk to underwriting to see if it could go through now as she had not submitted it the three weeks prior. I am not able to get an answer yet despite them having all the necessary information for almost a month. We’d certainly like to formalize an offer, but cannot as it appears they will not run the application through the VA’s underwriting program due to the timeshare issue.

    The essentials: This will be the fifth house we have purchased using the VA cert in the last 20 years; all houses paid off with one mortgage payment late, 30 days, 10 years ago. Excluding the CC chargeoffs, the other 7 cards have 1 late payment in the last 10 years. Student loans, one consolidation for ~$43000 and one private at ~$2000; all others are now paid off. And the last item is our DTI: prior to new mortgage amount 21%, with the new mortgage 29%. This will be reduced in 2022 to 23% due to two motorcycle loans being paid off.

    We are definitely not giving up, but frustrated at the lender as their lack of knowledge regarding the subject is costing us time and possibly the property. At this point, any new lender would add another hard inquiry as the initial two inquiries were Mid August and Mid September. I have a difficult time believing there is no one out there willing to lend at the moment given the red hot market.

    Thanks for taking the time to read this lengthy post.

    • Thank you for taking the time to detail out your scenario, it does help.

      I have your email, I am going to introduce you to Josh Lewis of BuyWise Mortgage – Josh is my business partner at BuyWise Mortgage in California as well as a partner on this website.

      The timeshare is considered installment debt, NOT Mortgage debt. That changed quite a few years ago.

      As for everything else, it appears that while there are a few explanations, I don’t see anything that would prevent you from using your VA eligiblitiy in NE California.

      THANK YOU for your Service!

      Sending email introduction to Josh now…Hope this helps?

  • Kenneth says:

    I have been denied under the Manual underwriting process, and I have no idea how to over come this issues when the credit score is where is need to be could someone help and that?

    • Hi Kenneth, let’s get you a second opinion. It is a little concerning to me that your loan officer did not explain to you why you could not be approved, and what you can do about correcting that situtaion.

      Shoot me an email at and let me know what State you’re in. Also, let me know if you are you trying to buy or refinance an existing VA loan?

      THANK YOU for your Service, I hope this helps?

  • Dymond says:

    Is it customary for a lender to include deferred student loans for a VA home loan? My student loans are deferred and I should complete my program in the next two years and the lender is Wells Fargo

    • Hi Dymond, here is the guideline per VA underwriting guidelines:

      If student loan repayments are scheduled to begin within 12 months of the date of VA loan closing, lenders should consider the anticipated monthly obligation in the loan analysis. If the borrower is able to provide evidence that the debt may be deferred for a period outside that timeframe, the debt need not be considered in the analysis.

      The challenge is that typically, the deferment is reviewed every 12 months, which makes it nearly impossible to document that your deferment will extend for 12 months AFTER your first mortgage payment is due.

      Unless you can document that your loan will be deferred for the next 13 to 14 months without needing to be reviewed, you’re going to most likely have to use the VA student loan calculation to determine a “payment” for debt to income qualifying purposes only.

      This calculation is as follows: Student loan balance x 5% / 12

      So, if you have a $50,000 student loan balance, it would look like this.

      $50,000 x 5% = $2,500 / 12 = $208.33

      $208.33 is going to be used when calculating your debt to income ratio. The light at the end of this tunnel is that VA is very flexible with debt to income ratios and will use other factors to compensate for or mitigate risk. Compensating factors include credit score, reserves, and residual income (how much is left after you pay all your bills).

      It is also not uncommon for big lenders to have an overlay, which means they choose to be even more strict than what guidelines allow for.

      If you would like a second opinion, shoot me an email at and let me know what State you’re in. I’m happy to introduce you to someone that I know and trust that has experience with both VA and student loan guidelines.

      THANK YOU for your Service! I hope this helps?

  • Mel says:

    I am in the process of getting my VA home loan in the last 3 weeks. Been going back and forth with the loan officer who’s not really passionate about her job and not really guiding me on what’s the best route to satisfy the underwriter when it comes to submitting documents or filler. Suppose to close Dec 30, Now I was told that she gave the loan package to the upper management for the decision since she can’t get a better answer from the underwriter. If the Upper Management gets involved, is that a good thing or bad? Our DTI is low, credit is good, great income and 100% disabled veteran.

    • I’m so sorry to hear that you are having this experience. Someone that doesn’t love helping people, especially veterans, is not an advocate, they’re a roadblock. It’s difficult to say what the issue could be, if anything. I also replied to your email and can introduce you t someone that I know and trust for a second opinion should you need a “Plan B” here.

      It’s hard to read the upper management thing here, it could just be something they made up as an excuse for the delays. Or there could be a legitimate question about the file that requires an exception from upper management – which is not uncommon with VA loans.

      You have my email,, I can definitely help connect you with a VA loan expert that is passionate about helping people.

      Hope this helps?