VA Loans Getting Denied in Underwriting? Here’s What You Can Do

Getting denied during underwriting for VA Loans can be frustrating, especially when you’re counting on homeownership benefits as a veteran. The underwriting process is where lenders assess your financial situation to ensure you meet loan requirements.

If your VA loan gets denied at this stage, it doesn’t mean the end of the road—it just means you need to take the right steps to fix the issue and move forward. Whether you’re applying for residential home loans or exploring refinance options, the key is to understand the reasons behind the denial and address them proactively.

Why Do VA Loans Get Denied in Underwriting?

Several factors can lead to a VA loan denial during underwriting:

• Low Credit Score: While VA loans have flexible credit requirements, a very low score may raise red flags.
• High Debt-to-Income (DTI) Ratio: Lenders assess your ability to handle new debt based on your income and current obligations.
• Employment Gaps or Unstable Income: A history of inconsistent income can make lenders hesitant to approve your loan.
• Property Appraisal Issues: If the home you’re buying doesn’t meet VA appraisal standards, your loan may get denied.
• Insufficient Residual Income: The VA loan program requires borrowers to have enough money left over after expenses to cover daily living costs.

Understanding the reason for the denial is the first step toward resolving the issue.

What to Do If Your VA Loan Gets Denied

If your VA loan has been denied in underwriting, here’s how you can turn things around:

Request a Clear Explanation

Your mortgage lender is required to provide a loan denial letter outlining the reason for rejection. Carefully review this information to pinpoint what needs improvement.

Check and Improve Your Credit Score

• Pay down outstanding debts.
• Avoid new credit inquiries before reapplying.
• Dispute any errors on your credit report.

Lower Your Debt-to-Income Ratio

• Pay off credit cards or other loans.
• Increase your income, if possible, by taking on additional work.
• Consider paying down debts before reapplying.

Work with an Experienced VA Loan Lender

Not all lenders specialize in VA loans. If your current lender isn’t experienced with VA underwriting guidelines, it may be worth switching to one that is. A knowledgeable lender can help guide you through the centennial refinance home loan process, ensuring your application meets all requirements.

Consider a Reconsideration of Value (ROV) for Appraisal Issues

If your loan was denied due to a low appraisal, you can request a Reconsideration of Value to have the property re-evaluated.

Ensure Proper Documentation

• Double-check income verification documents.
• Provide clear proof of employment stability.
• Include all necessary paperwork, such as service records and VA loan eligibility documents.

By addressing these issues, you can increase your chances of getting approved when you reapply.

Ready for a Second Chance? Choice Mortgage Group Can Help

At Choice Mortgage Group, we understand that the VA loan process can be overwhelming, especially when you hit unexpected roadblocks.

That’s why we work closely with veterans and active-duty service members to guide them through every step of the process. Whether you’re applying for home loans or need assistance with residential home loans, we’re here to help you fix the issues and find a path to approval.

Don’t let one denial stop you from homeownership. Contact us today, and let’s get you back on track.