Why VA Loans Get Denied In Underwriting and What You Can Do

A VA loan denial can feel like a major setback, but it doesn’t always mean the end of your homebuying journey.

Loan denials happen for a range of reasons, from credit and income concerns to appraisal issues or changes in your financial situation. Understanding what went wrong is the first step toward moving forward with confidence.

It’s also important to know that a VA loan can be denied at any stage, even after preapproval. While preapproval gives an initial picture of your finances, the underwriting process is a deeper review that verifies your information through third parties like employers, landlords and appraisers. If your financial situation changes, your lender may withdraw the approval.

Whether your VA loan was denied with Veterans United or another lender, the first step is to call your loan officer. They can explain the specific reason for the denial and advice on how to improve your ability to buy a home in the future.

Below are some of the most common reasons VA loans get denied, and what you can do about them.

Common Reasons for VA Loan Denial in Underwriting

VA loan denials aren’t uncommon, but approval odds are generally higher than for other loan types. According to the most recent HMDA data, 11.26% of VA loan applications received a denial in 2024, compared to 16.71% of FHA loans and 20.19% of conventional loans.

Some of the common reasons for VA loan denials are:

• Credit changes
• Application errors
• Unverifiable income
• Employment changes
• Borrower delays
• Property or appraisal issues
• High debt-to-income ratio
• Factors beyond your control

You can often prevent many of these situations. Here’s a closer look at the most common reasons VA loans are denied and how to improve your chances of approval during the homebuying process.

Changes in Credit

Before closing, your underwriter will reverify your credit score to ensure nothing has changed. They’ll confirm that you didn't take on any new debts that could impact your ability to afford your mortgage. New debts include auto loans, ATV loans, credit cards and more. Your underwriter will also ensure you haven’t fallen behind on existing debt during the homebuying process.

Even the little things can raise red flags in the underwriting process. Avoid unnecessary credit checks and refrain from taking out any new debt until your loan has closed. Maintain consistent habits during the home loan process, as new debts could affect your debt-to-income ratio and, ultimately, your ability to qualify for your VA home loan.

Was your VA loan denied because of credit? Our team is here to help. Talk with a credit consultant today.

Application Errors

Even with advanced systems and detailed documentation, home lending is ultimately a business comprised of people. That means there's always a chance for something to go wrong.

Sometimes application errors cause loans to be denied. Double-check all paperwork, letters of explanation and supporting documents. Most mistakes are easily fixable if caught early on, but you don't want something slipping through the cracks until the last minute.

Underwriters are strict about accuracy. Unverifiable income, undisclosed debt, and even minor errors, such as the number of family members, can cause problems. Sometimes these problems create a delay. Other times it's a deal-breaker. The best thing you can do is ensure your information is accurate and bring any discrepancies to your loan officer's attention.

Unverifiable or Lack of Stable Income

Many self-employed VA loan borrowers face challenges due to the inconsistency in their income. Remember, the underwriter is here to verify you can repay the loan with a reliable income. If your tax returns indicate an insufficient amount or fluctuating income, it may trigger additional scrutiny or a denial.

Additionally, your lender may require copies of your profit and loss statements, balance sheets, and other business financial documents. If you cannot provide these, it can cause problems and prevent your loan from closing.

These situations aren't always preventable, but you can help by being transparent with your loan team and providing all the requested documentation.

Change in Employment

Maintain consistent employment throughout the loan process. If a change is necessary, please discuss it with your loan officer as soon as possible. Letting them know sooner will give them the time needed to rework the loan information. An underwriter may consider income from a new job to be unreliable, so it's essential to plan ahead.

Even a positive career move may trigger additional documentation and employment verifications.

Borrower Delays

An underwriter may request additional financial statements and other supporting documentation. Make sure you understand the requests and talk with your loan officer if you're unsure.

Your loan officer may find alternate ways to satisfy the requirement. Underwriters will not issue a final loan approval until they have reviewed all required documentation, so a prompt response is key.

Delays in providing requested documentation may not trigger a denial, but they can prevent the loan from closing on time.

Factors Beyond Your Control

While not a "denial," other factors can still cause a deal to fall through. For example, the seller could back out or the VA appraisal could come in significantly below market value, with the seller unwilling to lower the price. At Veterans United, we've seen just about everything that can happen and will work with you to get through it.

What to Do if Your VA Loan is Denied

The first thing you should do if your VA loan is denied is get a clear understanding as to why. Borrowers rarely communicate directly with underwriters, but your loan officer should provide an exact reason for the denial.

If credit has held you back, Veterans United’s credit consulting program has assisted thousands of Veterans and service members in improving their credit and strengthening their financial profiles. With one-on-one support, this free resource is designed for those who want to take control of their credit and move closer to homeownership.

Keep in mind that a loan denial isn’t always permanent. Credit scores and income levels change over time, and many Veterans initially denied may qualify for a home within just a few months.

If you're concerned about what the VA loan process may look like for you, connect with a Veterans United VA loan expert or call anytime at 855-870-8845 to discuss your situation.