Published on August 29, 2019
Written by The Servion Group
The first change is that the minimum credit score requirement has been lowered to 600. VA loans are experiencing a 20-year low in delinquencies, which allows an increased appetite for risk. Also supporting this change are the VA’s conservative underwriting guidelines, which require residual income, childcare expenses, and a maintenance fee to be calculated into the DTI. By expanding VA loans to a larger group of people, we hope to help more veterans achieve their home ownership dreams.
The second change involves how much time must pass following Chapter 13 bankruptcy before a VA loan can be completed. Going forward:
The VA is in the process of rewriting the Lenders Handbook and is implementing each chapter as soon as they are complete. The recently updated guidelines provided by Servion include all changes the VA has implemented thus far.
Some of those changes include allowing the LTV on cash-out refinances to go up to 100%. As a reminder, the 100% LTV must also include the financed funding fee. The funding fee cannot be added on top of that LTV, like it can on purchases.
One final note: A new process has been implemented by the VA concerning the Certificate of Eligibility. The Certificate now must be ordered prior to ordering an appraisal.
Please stay tuned as the VA continues to roll out new chapters of the Lender Handbook for future changes to policy.