Credit Qualifying
Non-Credit Qualifying
VA IRRRL
All standard VA requirements must be met unless otherwise noted in the topic below. If the client is on a VA IRRRL loan and standard guidelines differ from the guidance outlined on the VA IRRRL topic, the guidelines outlined on the VA IRRRL topic will always take precedent.
Product Eligibility
When to Credit Qualify
PITIA increases greater than or equal to 20%
State Restrictions (See below)
Not Applicable
AUS Approval
Approve/ Eligible and Jumbo: Underwriting Findings/GUS
Refer/Eligible (excluding Jumbo): Manual
Manual Only
Alimony as Debt
Follow standard VA guidance.
Alimony does not need to be entered as a debt into the liabilities screen.
Transaction Detail
Existing lien must be VA
Cash out transactions are not allowed. Any cash back to client is capped by the max loan amount calculation.
Prior approval is not required.
Benefit of Streamlines
The benefit of the VA IRRRL is the reduced funding fee.
Client Eligibility
VA Joint Loans are allowed if the non-spouse co-client was previously obligated on the loan and/or title at the time of the previous loans closing.
See the VA Client Eligibility topic for additional details.
Occupancy
Subject property must be a primary residence.
Maximum Loan Amount
The maximum total loan amount is based on the lower of the following 3 options:
* Lower 48: $510,400
* AK & HI: $765,600
* Jumbo: $1,500,000
* All allowable closing costs, including 1% lender fee
* A maximum of 2% discount points
* The funding fee
* Prepayment penalties cannot be financed.
The client can pay additional discount points out of pocket if they choose.
Value
Most recent appraised value provided by the veteran will be used as the Estimated and Appraised Value.
Seasoning
Must meet ALL of the following:
* The date the first payment was due and the date of closing are included in the 212 days.
Example: Payment was due March 1 and we could close on September 28 giving us 212 days from the first payment due date and closing.
* If current loan has been modified, use date the modification agreement was completed to determine if 212 days will pass before closing.
* Payments cannot be made in advance to meet 6-month requirement.
Example: First payment was due on current loan January 1st, Anticipated Closing Date is in June: we must see evidence of payments made in January, February, March, April, May, and June prior to closing.
* If current loan has been modified, 6 consecutive payments must be made from the date of modification before loan can close.
Current loan was modified in March with first payment due under modified terms in April: we must see evidence of payments made in April, May, June, July, August, and September prior to closing.
* If client is in an active forbearance due to COVID-19, see the Forbearance guidelines.
* List A – 212 Day Rule Documentation:
1.) QL Serviced Clients: No documentation required. Seasoning can be verified through internal documentation.
2.) Non-QL Serviced Clients: Verify the date the current mortgage closed with one of the following:
> The first Mortgage Payment coupon
> The Note
> Modification Agreement if existing mortgage has been modified
3.) If the loan being paid off is greater than 1 year old, the date the current mortgage closed can be verified through one of the following:
>Title Search/Abstract (look for date current mortgage was recorded)
>Mortgage/Deed of Trust
>Verification of Mortgage
>Modification Agreement if existing mortgage has been modified.
* List B – 6 Month Consecutive Payment History:
1.) Loan being paid off is less than 1 year old: Obtain one of the following to verify payments have been made:
>Servicing Ledger
>Cancelled Checks
>Bank Statements
>Credit Supplement evidencing payment history for the 6 months needed to meet seasoning
>A credit report does not suffice due to months reporting not always indicating payments made.
Net Tangible Benefits Test
Must meet the following standards for reduction in rate:
* If the reduction in rate was achieved solely using discount points and they are being financed into the new loan, there is an LTV cap and an appraisal is required:
> See the VA IRRRL Matrix for LTV limits.
Recoupment of Fees & Safe Harbor Test Calculation
The allowable fees that are charged in the loan regardless of being financed or paid at closing must be recouped within 36 months.
If the client has no closing costs, recoupment does not apply.
How to determine if the fees will be recouped within 36 months:
* Then subtract Lender Credits (section J) and funding fee
Entitlement
Entitlement requirements do not apply. The VA will still guarantee 25% of the total loan amount.
ARMs
If state requirements do not specify how to qualify clients on ARMs, qualify at the note rate.
Funding Fee
Reduced Funding Fee of .5% on all of the following:
See the Mortgage Insurance topic for more information.
Certificate of Eligibility
A Certificate of Eligibility (COE) is required to be obtained except in the following circumstances:
Loan Terms & Payments
New loan term can be max 30 years with the new term not exceeding the original, not remaining term, by more than 10 years.
If the loan term is staying the same, then the interest rate and principal and interest payment must be reduced.
The new interest rate must be lower than the old interest rate unless the client is going from an ARM to a fixed.
If the PITIA increases ≥ 20%, the loan must be a Credit Qualifying IRRRL.
Appraisal
The VA case number is not required to be on the appraisal.
Quicken Loans Serviced (including Jumbo): No appraisal is required.
Non-Quicken Loans Serviced: See the Appraisal Forms and Requirements for requirements.
When an appraisal is required, the following are not required:
Condo Eligibility
Do not need to be on the VA approved condo list
State Restrictions
West Virginia
See the State Requirements topic for guidance on West Virginia.
Ability to Repay States: DC, Illinois, Ohio, Massachusetts and Nevada
Must follow standard Credit Qualifying guidelines.
Income must be listed on the 1003
Max 50% DTI
Wage Earner (Non-Passive) Income:
* If a paystub cannot be obtained, a work number can be used in lieu to verify the client's income.
* Self-employed income must be fully documented.
Passive Income Requirements
Nevada & Massachusetts only: Repayment Ability Acknowledgment form MUST be signed by the client(s).
Idaho and Montana
Must meet state specific requirements for maximum acreage, see the Maximum Acreage topic for guidance.
Kansas
Quicken Loans Serviced only: Property value can be obtained from the state of Kansas. If the state value does not work (no value is given or LTV is too high/expensive), the following applies:
Client-Provided Appraisal:
No Appraisal Provided:
Quicken Loans Non-Serviced Only: Property value can be obtained from the state of Kansas. If the state value does not work (no value given or LTV is too high/expensive), order a 2055.
Credit
Mortgage & Credit
Mortgage history must have max 0x30s in the last 12 months on all liens in the client’s name.
Credit history: Standard VA requirements apply.
Payment history requirements apply to any mortgage in the client’s name.
Mortgage history must have max 0x30s in the last 6 months on all liens in the client’s name.
Credit history: Not applicable
Payment history requirements apply to any mortgage in the client’s name.
Collections and Charge-offs
Must meet all applicable standard VA requirements.
No restrictions
Foreclosure / Deed-in-Lieu / Short Sale
Must meet all applicable standard VA requirements.
No restrictions
Chapter 7 and 13 Bankruptcy
Must meet all applicable standard VA requirements.
12 months must pass since the discharge or dismissal date if the subject property was included in the bankruptcy.
An active bankruptcy is not allowed even if a home is not included in the bankruptcy.
Daycare Expenses
Must meet all applicable standard VA requirements.
No verification required
Max DTI
Must meet all applicable standard VA requirements.
See the State Specific Requirements above for restrictions.
Non-Borrowing Spouse
Must meet all applicable standard VA requirements.
A credit report is not required for the non-borrowing spouse in community property states unless there is a state restriction or if using passive income to qualify that requires a DTI.
Disputed Accounts
Must meet all applicable standard VA requirements.
Disputed accounts on the credit report do not need to be addressed.
Public Records, Judgments & Liens
Standard VA requirements apply. See the Public Records, Judgments & Liens topic for requirements.
Income & Assets
Employment Income
Standard VA requirements apply. See Employment & Income topics for requirements.
Primary employer must be listed on the application
2 year work history is not required
No income should be stated on the 1003
Standard Salary/Hourly: Verbal VOE required for a minimum of one client on the loan. It can be for any client on the loan.
Salary/Hourly plus Commission, Bonus or Overtime: Verbal VOE is required for minimum of 1 client on the loan to confirm employment status. Can be any client on the loan.
Self-Employment: Must verify if business exists. See the Self-employment verification requirements.
Employed by Relatives:
> Must obtain 3rd Party Documentation. Examples include:
* Documentation from separate HR department
* Letter from accountant validating client is on payroll
Active Duty only: LES with an ETS within 12 months.
* Confirmation of future employment is not required.
Reserves/National Guard activation is not required to be confirmed.
Passive income
Full income verification is required. Follow VA Refer/Eligible guidelines.
See the Gap in Employment topic for additional requirements.
Passive Income/Non-Employment:
Residual Income
Standard VA requirements apply. See the Residual Income topic for details.
Not Applicable
Reserves
Standard VA requirements apply, except for VA Jumbo. Reserves are not required based on loan amount.
Reserves are not required.
Funds to Close
All funds to close must be documented.
Funds to close do not need to be documented.