VA Loan Rules and Lender Policies
VA borrowers who get familiar with VA loan rules and requirements are sometimes confused when they approach a lender. There are situations where the bank can’t or doesn’t offer certain VA loans, rates, terms or other features permitted by the VA loan rules.
For example; on the VA official site, borrowers will see plenty of information about new construction loans or VA loans for manufactured homes. But in the current economy, new construction loans and mobile home loans are hard to come by. Does the fact that the VA is willing to insure such loans mean the bank is required to issue them?
The short answer is no. The VA loan program is voluntary–the Department of Veterans Affairs can’t require lenders to offer credit at VA minimum standards or offer loans on properties the bank isn’t willing to take the financial risk on. A dedicated VA loan applicant may find a lender willing to issue a VA home loan for new construction or manufactured homes, but when the lending trends run against such transactions, the few willing lenders may have terms and conditions the borrower isn’t willing to agree to. In a challenging economy, flexibility in house hunting is definitely an asset.
So is planning early. Even when VA loan terms are more forgiving, a lender reserves the right to hold the borrower to higher standards for credit and reliable payments. Borrowers who don’t start examining their credit rating and payment history as early as possible run the risk of not getting approved for loans at the most favorable terms.
VA loans are still some of the most forgiving in terms of credit history and related issues compared to conventional mortgages, but borrowers should anticipate a more rigorous set of standards in today’s market and prepare accordingly.
That’s why the VA refers house hunters to the Ginnie Mae official site to find resources for housing counseling–it’s a very good idea to get some expert advice before starting on the road to home ownership–the more prep time a borrower takes, the better chance they have to get VA loan approval.
About Joe Wallace
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association.