Underwriting Guidelines
Eligible Borrowers
  • An eligible veteran is a person who served on active duty in the Army, Navy, Air Force, Marines, or Coast Guard, and who, (except for a service member on active duty) was discharged or released from active duty under conditions other than dishonorable; or
  • Members of the Reserves and National Guard are eligible upon completion of 6 years of service; or
  • Unmarried surviving spouses of veterans who died as a result of service or service-connected causes.
Documentation
  • All borrowers must have a valid social security number.
  • All borrowers must have at least one valid credit score.
  • Borrowers using non-traditional credit are not allowed.
  • An IRS Form 4506-T must be signed, completed, and dated at application and at closing by all borrowers. In addition, IRS transcripts for the time period covered by the required income documentation must be obtained prior to loan closing for all borrowers.
Underwriting
  • Minimum credit score required for all borrowers, regardless of Automated Underwriting decision.
  • Minimum loan amount $75,000
  • All loans must be submitted through DU or LP.
  • CH7 & CH13 Bankruptcy requires 24 months seasoning from discharge date
  • CH13 bankruptcy acceptable if not discharged 24 months if all of the following are met:
    1. 1) All payments have been made satisfactorily,
    2. 2) Minimum 12 months’ worth of payments have been made, and
    3. 3) The Trustee or Bankruptcy Judge approves the new credit
  • Foreclosure requires 24 months seasoning from completion
  • Any credit derogatories will require additional UW review and has the potential to receive a downgraded policy.
  • 2-4 unit properties require 6 months PITIA in reserves if rental income is used to qualify
  • Escrow Holdbacks not permitted
  • Mortgage rating must be 0x30 in the last 12 months
  • Credit report for non-borrowing spouse must be pulled in community property states with individual debts being included in the DTI. This applies if the subject property is located in a community property state or if the borrower’s primary residence is in a community property state even though the subject property is not in a community property state.
Purchase
  • Maximum loan amount at 100% Loan to value/Combined loan to value
  • Termite inspection completed and signed by veteran
  • No minimum down payment required unless the purchase price exceeds the value of the property
  • New Construction properties must be covered by either: 1) 1-year VA builder’s warranty or 2) 10-year insurance–backed protection plan
Cash Out Refinance
  • Maximum 100% Loan to value/Combined loan to value for cash out: Based on the property value indicated on the VA Notice of Value plus the cost of energy efficiency improvements plus VA funding fee. There must be a lien of record and the veteran must occupy the property.
  • Cash-out refinance transactions must pay off a lien secured by the subject property (i.e., mortgages, tax liens, judgment liens, etc.).
  • Refinance of the following loan types have additional requirements: construction loans, installment land sale contracts, and loans assumed by veterans where the interest rate was higher than the proposed refinance.
  • Mortgage rating must be 0X30 in the last 12 months
VA IRRRL
  • Recoupment period must not exceed 120 months
  • Reserves not required
  • Funds to close do not have to be documented
  • Income documentation is not required
  • Interest Rate Decrease Requirement: An IRRRL (which can be a fixed rate, hybrid Adjustable Rate Mortgage (ARM) or traditional ARM) must bear a lower interest rate than the loan it is refinancing unless the loan it is refinancing is an ARM.
  • Payment Decrease/Increase Requirements: The principal and interest payment on an IRRRL must be less than the principal and interest payment on the loan being refinanced unless one of the following exceptions applies:
    1. 1) 1. The IRRRL is refinancing an ARM
    2. 2) Term of the IRRRL is shorter than the term of the loan being refinanced
Manual Underwrite
  • Automated Underwriting “Refer/Eligible” finding allowed on an exception basis subject to manual underwriting requirements, compensating factors are required.
  • Subject to manual underwriting downgrade if additional information is identified in the loan file that was not considered in the Automated Underwriting “Approve/Eligible” findings
Reserve Requirements
  • Up to $636,150: Reserves required per Automated Underwriting Findings
  • $636,151 - $1,000,000 3 months reserves required
  • $1,000,001 - $1,500,000: 6 months reserves required
Eligible Property Types
  • 1-unit attached and detached SFR, PUD, condominium (VA-approved) homes
  • 2-4 Units- Standard and High Balance loan amounts up to $1,000,000
  • Owner Occupied Primary Residence only
Ineligible Transactions
  • Second Homes and investment properties
  • Escrow Holdbacks
  • Down payment assistance options
  • Manufactured Homes
  • Co-ops
  • Condominiums in projects that are not approved by VA
Appraisal Requirements
  • VA Notice of Value required for all loan amounts
  • The VA Notice of Value is valid for 6 months
Seller Contributions / Concessions
  • Seller concessions may not exceed 4% of the value of the property as indicated on the Notice of Value. Concessions include, but are not limited to the following: payment of the buyer’s VA funding fee, prepayment of the buyer’s property taxes and insurance, gifts such as a TV or microwave oven, payment of extra points to provide permanent interest rate buydowns, provision of escrowed funds to provide temporary interest rate buydowns, and payoff of credit balances or judgments on behalf of the buyer. Concessions do not include payment of the buyer’s closing costs or payment of points as appropriate to the market.
  • The seller, lender or any other party may pay fees and charges, including discount point, on behalf of the borrower. There is no limit on the amount of fees and charges that can be paid on behalf of the buyer by other parties.

Our VA mortgage specialists are ready to answer all of your questions 7 days a week:
Call us directly: 619.623.0633
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C2 Financial Corporation is licensed by the California Bureau of Real Estate, Broker # 01821025; NMLS # 135622. C2 Financial is a VA approved lender; not endorsed or sponsored by the Department of Veterans Affairs or any government agency. Loan approval is not guaranteed and is subject to lender review of information. Loan is only approved when lender has issued approval in writing. Specified rates may not be available for all borrowers. Rate subject to change with market conditions. This licensee is performing acts for which a real estate license is required. C2 Financial is licensed by the California Bureau of Real Estate: Broker #01821025. NMLS #135622. California Bureau of Real Estate #01326712, NMLS#84095.
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