Reasons Your VA Home Loan Was Denied Changes in Your Credit Rating. Low credit scores don't automatically prevent you from qualifying for a VA home loan, but they can be a problem for some lenders. Whether you apply for home financing with traditional mortgages or VA loans, your income is very important. You must be able to show the lender that you can pay your loan payments every month.
If your VA loan application was denied, it could be because your income levels are too low. The best thing to do is to ask your lender for clarification. They will be able to tell you if your income was too low. If so, look for ways to increase your income if possible.
This will increase your chances of qualifying in the future. When lenders refuse a loan, they reluctantly do so. VA lenders make money by approving loans, not denying them, so they can do what they can to get you approved. When they can't, they'll send what's called an adverse action notice.
While the VA loan program does not establish mandatory minimum credit scores, each partner lender will have their own income and credit requirements. A distinctive advantage of using your VA loan is that you may not have to pay some of the additional fees that are normally paid. Sometimes, however, the dream becomes a little scary for some and eventually a nightmare when their VA loan application is declined. Often, you'll need to work on your financial health before trying again, but in some cases all you need is a second opinion to get your VA loan approved.
Your Certificate of Eligibility (COE) verifies that you meet military service requirements for a VA loan. Before your loan closes, the insurer will double-check your credit to make sure you didn't lease a yacht, didn't repay your car loan, or did anything that could affect your approval. Members of the military who receive change of season orders may be eligible for VA loans to purchase homes near their new armed forces. The VA will accept some credit errors and will generally insure you even if you don't qualify on your own for a loan without this aid.
Inexperienced lenders can also make mistakes that, even if not intentional, can result in denied VA loan applications. Or there could be a legitimate question about the file that requires an exception from senior management, which is not uncommon with VA loans. Although relatively rare, there are a few things that can influence the success of your VA loan application. If you submitted your application to a lender, provided your documentation, and your credit was reviewed, if you didn't get their approval once you found a property, it's likely that your VA loan officer made a mistake somewhere or that the information you provided in your application could not be verified.
If you're struggling to get the housing finance you deserve and your VA loan applications have been denied, don't lose hope. You may need to spend some time paying off debts, disputing a negative rating on your credit report, or simply paying more of your debts on time to be in a better position for VA loan approval.