When getting a VA loan, it is possible for the underwriter to take into consideration “compensating factors” when deciding whether or not to approve you for a loan. What exactly are compensating factors? Simply put, they are anything that may help the underwriter know more about your individual situation so they can approve you (or deny you) based on your total profile.
Here is a short list of the allowable compensating factors:
- Excellent credit history
- Conservative use of consumer credit
- Minimal consumer debt
- Long-term employment
- Significant liquid assets
- Sizable down payment
- The existence of equity in refinancing loans
- Little or no increase in housing expense
- Military Benefits/Non-taxable income not being ̳grossed-up‖.
- Income not being used in qualifying
- Satisfactory homeownership experience
- High residual income
- Tax credits for child care
- Tax benefits for home ownership
If you are in a situation where compensating factors can help you get approved, be sure to check with your loan officer about presenting your compensating factors in such a way that the underwriter can get a complete picture of your credit worthiness – and not make a decision without having complete information.
Have more questions about compensating factors? Be sure to speak with a a VA lender today who can help you. The best thing you can do to get your compensating factor questions answered is to speak with multiple VA approved lenders who can help you get approved for a loan. Get started today and speak with a VA lender right here who can help you