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A Guide to VA Loan Underwriting


For Veterans and eligible service members, the VA loan is a powerful tool to achieve homeownership. But before this dream becomes a reality, there's a crucial step that every VA loan goes through: Underwriting.

This process is like the final exam for your loan, where experts ensure everything is in place and you're prepared for the responsibilities of homeownership.

What do underwriters do?

VA underwriters have an important job. They’re here to ensure the lender is making a good investment. The purpose of an underwriter is to go over your loan file with a magnifying glass, making sure your file meets all the requirements and that you’re a safe bet when it comes to making those mortgage payments on time.

So, why are lenders so cautious? Haven’t you been through enough scrutiny by now?

Well, remember: The federal government insures a portion of every VA loan. That financial guaranty helps lenders avoid a total loss in the event a borrower defaults. Lenders that deviate from VA rules lose that insurance. In addition, lenders often need loan files to meet additional requirements in order to sell them on the secondary mortgage market.

VA Underwriting Guidelines 2024

Underwriters will comb through your loan file to ensure every “t” is crossed and every “i” is dotted, both to satisfy the VA’s requirements as well as any additional criteria set by the lender.

More specifically, your underwriter will verify that you are an acceptable level of risk to the lender and that you have sufficient income to cover future mortgage payments.

VA Underwriting Process and Timeline

Underwriting serves as the final review of a borrower’s loan file and generally takes at least a few weeks to complete.

There are two phases of underwriting that buyers should understand: preapproval and closing.

Phase One: Preapproval

Buyers enter the first stage of underwriting during preapproval.

VA lenders generally rely on an “Automated Underwriting System,” or AUS, to determine a buyer’s preapproval status. An AUS is a computer program that instantly evaluates a buyer’s eligibility based on a variety of factors.

Not every qualified borrower will obtain AUS approval. In those cases, lenders may consider a “manual underwrite,” which is a more involved process that typically utilizes more stringent requirements.

Different lenders can have different requirements, but generally, events such as a prior bankruptcy or foreclosure, defaulting on federal debt, late mortgage payments and similar factors can potentially result in manual underwriting.

Phase Two: Closing

In addition to the AUS evaluation during preapproval, lenders will re-examine a buyer’s qualifications during this second phase of underwriting. This second underwriting step occurs after a buyer enters a contract on a home but before they close on their home purchase.

Once you’re under contract, your lending team will start working to verify and update key information. The goal is to get your loan file as complete as possible before it heads to a lender’s underwriting staff. These are real people looking at your financial and credit information, your contract, your appraisal and other key documents.

How long does underwriting take?

The timeline for underwriting can vary depending on several factors, but it generally takes somewhere between three to six weeks to complete. The time it takes for underwriting can be influenced by the complexity of your financial situation, the volume of loans being processed by the lender and other relevant factors.

Veterans United's underwriting process typically takes around 45 days to fully complete. However, your loan underwriting timeline may vary depending on a variety of factors. Reach out to a Veterans United VA loan expert today at 1-800-884-5560 about your specific situation.

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Underwriting Outcomes

After reviewing your file, an underwriter will issue one of three possible outcomes:

  1. Conditional approval: This usually means you’ll need to provide additional documents, answer questions or correct errors in your file before being able to move forward.
  2. Clear to close: Your loan file is clean and you’re ready to close on your new home. It’s rare for a loan file to get a CTC, as it’s called, the first time it goes to an underwriter.
  3. Denial: An underwriter can deny your file outright. This is also a rare occurrence but could happen due to a variety of factors that may affect your unique financial situation.

Every lender and every loan file is different. But, broadly speaking, conditional approval is the most common outcome and traditionally the next step.

Underwriting Conditions

Receiving a conditional approval on your loan file is common. Homebuyers rarely sail through the underwriting process without conditions.

These “conditions” are often simple issues that borrowers can quickly clear up, sometimes on the same day. Your loan officer might ask you to write a “letter of explanation” that addresses a specific question or problem, like why you had a late mortgage payment or what led to your recent short sale. Lenders may also be waiting on third parties to verify things like your tax returns or income documents.

Underwriters may request things like additional pay stubs or more tax returns before issuing final approval. There are hundreds of possible conditions.

What will a VA underwriter look for?

Again, every loan file is different. But here are a few common questions underwriters will often consider for borrowers who have received conditional approval:

Has the borrower’s income and employment situation changed?

Lenders will conduct a verification of employment (VOE) no more than 10 days before closing.

Has the borrower made any large bank account deposits?

Substantial bank deposits will typically require further documentation.

Does the borrower have a “clear” CAIVRS?

Anyone presently delinquent or in default on federal debt can’t be considered a satisfactory credit risk when evaluated by the CAIVRS database. Underwriters will confirm that the borrower is in the clear or that a satisfactory repayment plan is in place.

Are there any judgment liens against the borrower’s property?

These would need to be repaid or otherwise satisfied before a loan could close. Past judgments or liens with the IRS that don’t appear on your credit report can still show up on title work later in the loan process.

If the borrower is currently a homeowner, have they been late on any mortgage payments in the last 12 months?

Some lenders may allow up to one 30-day late payment in the last year, but others will require at least 12 consecutive months of on-time payments.

Getting a Clear to Close

It’s important to understand you’re not being targeted or picked on if there are conditions on your loan file. The underwriter’s job is to protect the lender, but lenders who don’t actually make loans have a tough time staying in business. It’s a balancing act.

If you’re asked to provide additional documents, strive to get them back to your loan officer as soon as possible. Also, be sure you’re sending exactly what the lender needs. Sending incomplete or illegible documents can delay the process. Talk with your loan officer if you have any questions about what’s needed.

The faster you move, the faster your lending team moves toward resolving the conditions and getting you to closing day. Once the underwriter is satisfied with all of your paperwork, the lender issues a clear to close. The lender will send your loan documents and paperwork to the title company to prepare for your closing. Your homebuying journey is nearly at an end.

About Our Editorial Process

Veterans United is recognized as the leading VA lender in the nation, unmatched in our specialization and expertise in VA loans. Our strict adherence to accuracy and the highest editorial standards guarantees our information is based on thoroughly vetted, unbiased research. Committed to excellence, we offer guidance to our nation's Veterans, ensuring their homebuying experience is informed, seamless and secured with integrity.

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