The VA loan is one of the best mortgage options in the industry. While it’s only available to qualifying veterans, VA loan approval allows future homeowners to make the purchase with easier qualification requirements and a low downpayment. Compared to other loans, it can also have lenient credit requirements and, for some veterans, it can be used with absolutely no downpayment, making it an affordable option for entering homeownership.
But even VA loans come with standards, requirements, and qualifications, and some borrowers may experience difficulty when trying to take out a VA loan. If you are having issues, these simple tips could help you get the top-quality loan you deserve.
Qualification Hacks: Simple Tricks to Increase Your Chances of VA Loan Approval
Increase Your Downpayment
This is a simple step that may not be easy for everyone, but if it’s at all possible to increase your downpayment, it can go a long ways towards VA loan approval.
This strategy, however, undercuts one of the top advantages for using a VA loan: no downpayment. A VA loan is one of the few options available that allows eligible borrowers to purchase a home with absolutely nothing down. Many veterans choose these loans precisely for this reason, but if you are having trouble getting approved, a downpayment can be useful. Something as small as 3% to 5% could increase your chances of approval.
Use a Non-Married Co-Borrower
If you are struggling to get approved for a VA loan, one of the most effective techniques is to use a non-married co-borrower to complete the process. With this strategy, you essentially have another borrower listed on the loan. They have legal ownership of the property, which is the main difference between this option and using a cosigner.
With a co-borrower, you can use their income, debt ratios, and credit profile to your advantage. Whether or not they will actually be paying towards the loan, with this option you can significantly increase your chances of mortgage approval.
Many friends and family members have agreed to be co-borrowers in the past, and this strategy can be effective for reaching approval. However, you should be aware that it can create risk. If you are using a co-borrower, any missed payments or loan defaults will negatively impact their finances and credit, so you need to be cautious and careful when using this approach.
Utilize All Types of Income
If earnings was a problem, you can increase your chances of VA loan approval by utilizing all forms of income. Unfortunately, not all incomes can be listed. But documentation of various sources could improve your debt-to-income ratio and create a better outcome when filing your VA loan application.
Documentation of income must verify the history of these sources and show that they will continue for a certain period, usually about three years from the anticipated closing date.
These incomes can come in numerous forms, including…
Pensions
Although pensions are not as common as they once were, if you have this income source it can be used as an option for your VA loan. Pensions from companies are excellent sources for retirees, often reaching thousands of dollars a week, so it makes perfect sense to use this income on your application.
Disability Income
Another potential source of income is disability. Regardless of where this income is coming from, it can be put to use to increase your chances of VA loan approval. If you have been injured and receive some sort of compensation, talk to your lending professional about using this resource.
Stock Dividends
Stocks can be a useful way to support your lifestyle in retirement years, but you don’t have to be retired to receive dividends from these investments. There is a strong chance that you’ll have an option to use this income as you seek VA loan approval.
Money from stocks often has to be “discounted” to account for market volatility. Essentially, while a stock portfolio is likely to increase, there is also a real possibility it could go down in value. To account for this potential decline, your lending agent will use only a portion of the account on your application. The lending professional will use an average of what you receive, then discount that amount as needed.
VA Disability Income
If you have any disability income coming from the VA, there is an easy process for using these funds towards VA loan approval. This income is considered a VA benefit, and therefore does not need to be documented for the likelihood that it will continue. Documents will usually have the amount of VA disability income listed, making the use of this income source relatively easy.
Public Assistance
A lender may also include verified income that comes from public-assistance programs. Once again, to use this income source you will need to verify that it will continue for at least another three years. Documentation of letters from the organization may be required for VA loan approval.
Worker’s Compensation Income
If you choose to reveal the income, the lender can use worker’s compensation on your VA loan application. As long as it will continue for three years it is an acceptable income source.
Interest from Savings and Bonds
These investments are not considered a high-yield option, but they are a safe and secure way to park your money and avoid the volatility of the market. If you are receiving interest from savings or bonds, it could help you reach VA loan approval. The larger the account, the more interest it will bring, so talk with your lending agent about using this resource.
Get the Support You Deserve from a Team that Cares!
If you are looking for a top-quality mortgage loan that will help you purchase the home of your dreams, contact our staff today. With dedicated support from a team of mortgage experts, we can increase your chances of VA loan approval.
