Underwriting for VA Loan
Every VA home loan goes through underwriting as part of the application process. As the last step before approval, an underwriter checks whether the borrower meets the criteria to afford the loan. Checking affordability helps to reduce the risk of default and reassure the lender that they're making a wise investment.
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On This Page
- What Does a VA Underwriter Do?
- How Long Does VA Loan Underwriting Take?
- VA Underwriting Guidelines
- VA Loan Underwriting Process
- What Can Happen After Underwriting?
- Common Underwriting Conditions
- How To Speed Up the VA Loan Underwriting Process
- What Happens After You Get a ‘Clear To Close’?
- Navigate the VA Loan Underwriting Process With Confidence
Veterans Guide helps veterans and active-duty service members understand VA home loans. We walk applicants through complex processes, such as underwriting for VA loan applications. When you’re ready, we can connect you with VA-approved lenders that can explain their underwriting requirements in detail.
What Does a VA Underwriter Do?
A VA underwriter makes approval recommendations on VA home loans. These independent professionals work for private lenders, not the VA. While they are not VA employees, they must meet certain requirements, including three years of underwriting experience, to underwrite VA loans.
As objective professionals, their job is to ensure the borrower has the income and financial stability to handle mortgage payments. They aim to minimize the lender’s investment risk while protecting the borrower from untenable mortgage costs.
Underwriting for a VA loan involves checking the borrower’s qualifications against VA-specific and lender-specific requirements. The underwriter’s primary objective is to verify that the borrower has a satisfactory borrowing history and sufficient anticipated income to fulfill the repayment terms.
What Will a VA Underwriter Look For?
When applying for a VA loan, it’s crucial to understand what underwriters assess to ensure your eligibility. Here are the key factors they’ll examine:
- Credit History & Score
While the VA doesn’t set a minimum credit score, lenders typically look for scores between 580–620 or higher. They focus on your on-time payment history, recent late payments, bankruptcies, or foreclosures. Red flags like high credit card balances or new debts close to closing could jeopardize approval. - Debt-to-Income (DTI) Ratio & Residual Income
Although VA loans offer flexibility, your DTI ratio is an essential consideration. Many lenders prefer a DTI of 41% or less, but higher ratios may still be acceptable with compensating factors. Residual income, unique to VA loans, ensures you have enough money left after monthly expenses. It’s verified carefully by underwriters and can make or break your approval. - Employment & Income Stability
Underwriters will verify stable employment—ideally with a 2-year history—and consistent income sources like base pay, disability, or pension. They’ll require documentation, including pay stubs, W-2s, and tax returns. Self-employed applicants must provide tax returns and profit-and-loss statements for the last two years. - Assets & Financial Stability
While VA loans don’t require a down payment, underwriters still examine your bank statements, large deposits, and reserves to ensure financial stability. - Certificate of Eligibility (COE)
The COE confirms your eligibility for a VA loan, ensuring you meet the necessary requirements and aren’t subject to unnecessary fees. - Property Appraisal
Lastly, the property’s condition is critical. If repairs are needed, the underwriter won’t approve the loan until they’re addressed.
How Long Does VA Loan Underwriting Take?
VA loan underwriting typically takes 2–10 business days, but the full VA loan process from contract to closing generally runs 20–40 days. The exact timing depends on the lender, the complexity of your file, and how quickly you provide requested documents.
Typical VA Loan Underwriting Timeline
| Stage | What Happens | Timeframe |
|---|---|---|
| Initial Underwriting Review | Underwriter reviews income, assets, credit, COE, appraisal order, etc. | 2–4 business days |
| Appraisal Completion | VA-certified appraiser inspects property. This step is often the slowest. | 7–12 days |
| Final Underwriting / Conditions Review | You submit missing documents ("conditions") and UW signs off. | 1–3 business days |
| Clear to Close | Lender finalizes numbers and prepares closing disclosures. | 1–2 days |
VA Underwriting Guidelines
The VA requires applicants to show the following:
- Minimum service requirements: Applicants must meet active-duty minimums, which vary based on the veteran’s time of service. Current active military must have served for 90 continuous days.
- Sufficient income: According to VA underwriting requirements, the applicant’s income must be “verifiable, stable, and reliable,” both currently and for the foreseeable future.
- Probable continued employment: Part of verifying income is establishing that the applicant is likely to be employed through the foreseeable future. Typically, the underwriter must verify two years of continued employment or stable self-employment.
- Satisfactory credit history: The VA does not have a minimum credit score for approval. However, borrowers must demonstrate a history of responsible repayments. This includes 24 months of rental or mortgage payments, if applicable.
If the borrower does not have a credit history, VA manual underwriting guidelines permit the review of non-traditional borrowing records.
VA Loan Underwriting Process
The VA home loan process consists of three phases, each with distinct requirements for the buyer.
Phase 1: Preapproval
Lenders use an Automated Underwriting System, or AUS, to briefly review the buyer’s financial credentials. Qualifying applications receive an “Accept” or “Approve” rating. However, a live underwriter must sign off on final approval.
Phase 2: Manual Underwriting
If the AUS flags your mortgage application as higher risk, the VA might send it to manual underwriting. This process may be necessary if you have financial red flags, such as bankruptcy or defaults. A non-traditional borrowing or income history is also a common trigger.
Manual underwriting may take longer and require additional documentation. For example, if your debt-to-income ratio is high because of an unconventional work history, you may need to submit further proof that you can afford loan payments.
Phase 3: Closing
After an underwriter approves the loan application via AUS or manual underwriting, the lending team will review all your documentation and incorporate any additions, such as appraisal results and the sales contract. They will then send your loan to closing, at which point you’ll need to sign a Closing Disclosure.
This document outlines all expenses associated with the purchase and provides details about your loan, including your interest rate and payment schedule. It’s wise to review this document with your lending agent before signing.
What Can Happen After Underwriting?
The transition from underwriting to closing doesn’t always happen smoothly. Be ready for any one of the following three outcomes.
Conditional Approval
A conditional approval is a common outcome following any mortgage application, including for VA home loans. Conditional approval for a VA loan means that most of your information meets eligibility criteria, but the lender requires you to take additional steps or submit further documentation.
Clear To Close
A VA loan is clear to close if the underwriter has confirmed that you meet all requirements from the VA and your lender. Once you receive notice that your loan is clear to close, you can expect the lender to send a closing disclosure, which explains the details of your agreement. Plan to review these with your loan officer before signing your loan documents.
Denial
A VA underwriter may deny your application if the information you provide is incomplete, inaccurate, or non-verifiable. To prevent such issues, thoroughly review your application before submitting it.
You may also receive a denial if the VA underwriter has doubts about your qualifications. Common factors include the following:
- Credit red flags: Records of missed payments, defaulted accounts, or excessive borrowing
- Unstable employment: Less than two years in your current job or industry
- Appraisal problems: A property appraised for a value below the loan amount
A denial isn’t necessarily the end of the road. Ask your lender how you can resolve the issue and improve your chances for future success.
Common Underwriting Conditions
If you receive conditional approval, the VA requires you to resolve a specific issue before clearing you to proceed with closing. Common conditions include the following:
- Verification of employment, or VOE: Your lender can send this VA form directly to your employer with your signature.
- Resolution of CAIVRS status: CAIVRS is a federal information system that can tell lenders when a borrower has defaulted on a federal loan. The VA requires a CAIVRS inquiry for all VA loans.
Removing judgment liens: These are court-ordered claims on your property, resulting from an outstanding debt. If you have a judgment lien on their property, you must satisfy your obligation before a lender can approve you. - Verifying large deposits: When reviewing a mortgage applicant’s bank statements, underwriters must verify the sources of deposits worth more than 50% of the applicant’s monthly qualifying income. Verification may consist of a written application or proof that the funds represent a gift.
- Housing payment verification: Underwriters typically expect two years of housing payments to approve an applicant. The VA may request alternative documentation if you don’t have formal records, such as mortgage payments.
- Employment verification: The VA may request additional proof that you meet home loan income requirements, particularly if you don’t have a VA loan Verification of Employment form.
How To Speed Up the VA Loan Underwriting Process
Delays may occur if the VA has trouble processing your application. To reduce your risk of a delay:
- Submit complete and legible documentation
- Write clearly and legibly, or use a PDF forms editor to complete fields electronically
- Fact-check information against your records before you submit your application
If the VA requests additional information, respond promptly and provide as much factual detail as possible.
What Happens After You Get a ‘Clear To Close’?
Once the VA underwriter officially approves your application, you’re free to schedule the closing on your home. Review the loan documents against your initial loan estimate and be prepared with the necessary funds to cover the closing costs. These will vary by market and depend on your arrangement with the seller.
Navigate the VA Loan Underwriting Process With Confidence
Understanding the VA underwriting process can make mortgage borrowing go more smoothly and feel less intimidating, especially for first-time homebuyers. Preparation is key to avoiding delays. Don’t hesitate to gather more documents than you think you need, especially if your work or borrowing history is unconventional.
When it comes to borrowing, there’s no such thing as being too prepared. More importantly, consult with approved VA lenders at the start of the process to fully understand the qualifying criteria and the loan process.
