VA loans

Who Approves A VA Loan?

July 28, 2011


Who Approves A VA Loan?

Applying for a VA home loan can be a bit more complex than a conventional loan, but the perks (including the no money down option) can definitely be worth the additional effort.

One of the complexities of a VA loan application has to do with how the loans are approved. With a conventional loan, the borrower applies, submits the loan application paperwork and waits for the lender to do the work. For many VA home loans this process is the same, but some VA loans require an additional step.

VA regulations say that a lender with “automatic approval authority” can make the call on whether or not to approve a VA insured mortgage in a variety of situations, but some VA loan applications require the loan to be submitted to the VA for “prior approval”. For example, joint loans must be submitted to the VA. Joint loan transactions are not simple issuance of credit to qualified borrowers, and require closer scrutiny.

That’s not to say that it is more difficult to qualify for a joint loan–every situation has its own nuances–but the VA does insist on a closer look at the application first. The prior approval requirement means the loan application may take a bit longer to process, but once the loan comes back as approved from the VA, the process can begin moving forward again.

The VA Lender’s Handbook says, “All lenders, whether or not they have automatic authority, must submit the following types of loans to VA for prior approval” including “loans to veterans in receipt of VA nonservice-connected pension” and “loans to veterans rated incompetent by VA”. Interest Rate Reduction Refinancing loans made for delinquent mortgages also require prior VA approval.

In some cases, VA loans for manufactured homes also require prior VA approval. This is true when the manufactured home is not “permanently affixed to the lot and considered real estate under state law”. The VA does provide an exception to this rule–a lender who has been “separately approved” for automatic approval authority for these types of mortgages is not required to submit for prior approval from the VA.

The list of VA mortgage loan applications which must go to the VA for prior approval also includes co-op and supplemental loans, and “unsecured loans or loans secured by less than a first lien.”

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  1. Thernell Young

    VA loan rule for land purchases. Question VA approve home loan for qualified borrowers who want one custom- build and purchases of land Please provide info on how can I can get construction loan money. Thanks, Thernell 08/02/2011

    • Joe Wallace

      Hello Thernell. To get a construction loan you'll need to find a lender willing to issue you a construction loan, but some lenders aren't willing to do them in the current housing market. Good luck in your search!

  2. Gail D

    I have a lot of questions about this whole process and I need it dumbed down for me. Its rough trying to understand it all. If someone knows a lot about the process and what not please give me a email.

    • Joe Wallace

      Hi Gail--try sending your questions to and I'd also recommend this handy guide to the process--it's called VA Loans 101 and can answer a LOT of your questions:

  3. Gary Ferguson

    How does anyone get a VA loan with Bad Credit-lower than 620? Gary Ferguson Boston, MA

    • Joe Wallace

      Hi Gary thanks for your question--have you spoken with a VA housing counselor? More information is available here:

  4. cindy

    I looked up the list of eligible condo/townhomes in Santa Cruz County (California) and there was only one listed. That can't be right, can it? Townhomes are so much more affordable than detached homes. I don't understand why the VA is so picky about them. Can my lender approve a townhome under a VA loan even if it is not on the list?

    • Joe Wallace

      Have you asked your lender if that particular property is under review for approval or requested the lender's help in getting it submitted for consideration?

  5. cindy

    I haven't talked to the lender about any particular property but I will do that. How long does it typically take to get a property listed? Thanks!

  6. Will

    With the change of the VA loan limits come 1 Jan, what if you have been building a house and close in January and have went through the approval and appraisal process already. Are you grandfathered over to the 2011 loan rates?

    • Joe Wallace

      I would advise you to speak to your lender on this issue, but it seems to me that if your loan has already been approved you would enter 2011 with the VA loan amount locked in based on what's in your written loan agreement.

  7. Edward Sparacio

    I have a 640 credit score. I am a 100% SC disabled veteran. My credit problems are all 5 to 9 years back (foreclosure, repo, and bankruptcies). I have an $1150.00 open money judgement I want to pay, and that's it! I am 100% disabled through SSA as well ($4,300.00 per month net). My disability is 100% since 1992, and can never be lowered. I applied at Veterans United 3 weeks ago, and was approved for a $260,000 town home (pre-approval in hand). They canceled my pre-approval due to the $1150.00 judgement though I said I would pay it off immediately. I went to Wells Fargo, and though I am property tax exempt, they would not calculate the loan without adding in the property tax of which is $6,000 annually in New Jersey. By adding the $6000.00 into the loan, I went from being able to purchase a $320,000 home loan using my VA loan eligibility, to only a $150,000 home loan. I've applied to two other VA lenders such as Quicken Loans and was told the VA appraiser denied the loan. What can I do? this is not fair.

    • Joe Wallace

      Once the judgement is paid you should definitely try again. To get additional information on how having a judgement on your record can affect a VA home loan application, call 1-800 827-1000 or reference Basically, VA loan rules require your judgement to be paid in full prior to closing.

  8. Roxanne Delinko

    I recently closed on my VA Approved Loan on August 29, 2014. When the VA Inspector came to appraise the home, he found two (2) minor repairs needing done plus he appraised the home lower then the sellers' asking price. The 2 minor repairs were done by the sellers and I got the house for the VA appraised price. As stated, we closed on the house on August 29, 2014. My insurance company (USAA) had an agent come out to appraise the house in case of accident. He found that the home has Knob and Tube wiring. USAA stated that the Knob and Tube Wiring must be replaced prior to May, 2015 or they will no longer insure me. My questions: Why did the VA Inspector NOT find the fault with the Knob and Tube Wiring when he did his inspection? He found two very minor faults but Failed to find this costly Knob and Tube wiring. Since it was the failure of the VA Inspector to find this fault, would it not be the responsibility of the VA to "make things right" and pay for the cost of having the Knob and Tube wiring replaced in my home? I greatly appreciate any and all assistance you can provide me. Thank you, Roxanne Delinko

    • Joe Wallace

      VA appraisals are not a guarantee that the home is defect-free. Borrowers are encouraged to pay for home inspections prior to purchase--the appraisal establishes fair market value and insures the home meets minimum standards.

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