VA loans various benefits

Borrowers will have to meet the basic credit standards. However, the loan is not "score driven".

  • Borrowers can prepay the loan without penalty.
  • The closing costs are limited by VA.
  • Borrowers will not have to pay private mortgage insurance (pmi).
  • Borrowers can get assistance if they're unable to make payments.
  • VA loans are assumable, but the person assuming the loan should be qualified.

 

This website has a lot of great information, but it doesn't answer my question regarding whether non-sufficient funds fees on bank statements will ruin our chances of VA loan approval.

My husband and i have been with our bank for 5 years, and have never had an issue with NSF. Our debt to income ratio is low - we only pay on 2 cars and 1 credit card, with $700 on it and a $5000 limit.

Our credit is good and our payment history with all bills is stellar. We have, however, accumulated 1 NSF charge a month since may - all well under $100.

We have been caring for my sick grandmother, and many things have been neglected -- along with checking our account balance daily.

The charges over drafted into our savings. We make more than enough to cover our bills and the mortgage we're applying for will be almost $100 less than our current lease.

It's just a matter of monitoring our account so we know not making certain purchases if our balance is getting low, which we have started doing again on a regular basis.

While we have a lot going on, it is no excuse for financial issues, and we're concerned that this will keep us from becoming home owners.

My question is, how do VA underwriters view NSF charges? Will a good loan explain them away, and allow all of the positives on our loan application to overshadow this, or should we plan to renew our lease?

I'm not qualified to answer as a VA underwriter, but can give you a generic answer.

NSF charges on a checking account are held as a matter of sloppiness. If you're sloppy with how you handle your checking account, you might be sloppy in handling your mortgage payment.

You will be best-served to provide a detailed explanation that plays on their hearts.

I believe that "all of the positives" may well overshadow their opinion that you don't know how to handle a checking account, but it's going to be difficult with some underwriters, while others will accept whatever you say.

Pray you get the latter type, and prepare the most eloquent explanatory letter you can.