A VA Home Loan Case Study

In January of this year, I was working with a client to get her pre-approved for her first home.

She had just completed her second year in the Navy and was ready to use her VA entitlement to realize her dream of homeownership, but her income alone wasn’t sufficient for her to qualify in San Diego’s increasingly steep market.

I began putting together a number of strategies to help her clear this hurdle, one of them being to recruit a co-applicant. Lender after lender told me that the applicants must be married, though, which narrowed our options for a co-borrower down to nobody. I dug through the VA Lenders Handbook and found a way that we could have a non-spouse on the loan with her, coming straight from the source.

Joint VA Loans

The VA Lenders Handbook is the arbiter of VA loan rules and guidelines. In chapter 7, the Good Book defines a Joint Loan as generally referring to loans wherein the “veteran and other person(s) are liable and… A Joint Loan is made to the veteran and one or more non-veterans (not spouse).”

After bringing this information back to those aforementioned nay-saying lenders, I was told by one of them that they could lend to my client.

Manual Underwriting

I’ll save the different methods of underwriting for another blog post, but the reason that all but one lender turned my client away is that one lender was willing to do what’s called a “manual underwrite.” This, in my experience, is a very rare avenue to take. It leaves more room for a human underwriter’s human discretion, for better or for worse.

The Solution

If I am required to entrust my client’s biggest financial decision to date to a manual underwrite, that is to say an individual or small team of underwriters manually poring over each and every tiny detail, then I’m going to need some certainty from them.

That’s where a “TBD” submission comes in. This means submitting the loan to the lender without a subject property address, long before an offer is even made on a home. The loan gets underwritten and approved, and when a home is found, we not only have certainty in how it will go, but we have a head start on the loan process.

The underwriters, who already have all of the client’s info and documentation, simply plug the address into the loan that they’ve already approved, make sure that it doesn’t materially change the loan, and the file continues on its path to closing. 

Conclusion

With this method, we get the absolute certainty that comes with the mechanical stoic feedback of automated underwriting, with the discerning, human, “make sense” approach of manual underwriting.

There are, of course, nuances to Joint VA Loans that would make this post insufferably long. But that’s what I’m here for– to listen, advise, and educate to the best of my ability. Please don’t hesitate to reach out if you or your significant other are seeking to use your VA entitlement for your next home purchase.