VA loans may be denied for common reasons such as bad credit, high debt, unstable income, missing a Certificate of Eligibility (COE), or a property failing to meet VA standards. Lenders may also lack understanding of VA guidelines. To improve approval chances, address credit issues, reduce debt, show stable income, obtain the COE, and ensure the property meets requirements. Understanding these common reasons VA loans get denied can make a big difference in securing approval.
Common Reasons VA Loans Get Denied
Let’s get real about the gut-punch reasons why VA loans fall apart. If you know the mess upfront, it’s 10x easier to clean it up. Here’s where most people slip:
- Bad credit history
- Too much debt
- Unstable income or gaps in employment
- No COE (Certificate of Eligibility)
- Property doesn’t meet VA requirements
- Lender doesn’t understand VA guidelines
Let’s tackle these one by one—but in real talk, not corporate brochure lingo.
Bad Credit? Doesn’t Mean Game Over
If your credit’s ugly right now, you’ve still got hope. The VA doesn’t actually set a minimum credit score. That’s the lender’s nonsense. Most want 620+. Some will go lower.
Want to know how to fix VA loan disqualifiers and improve your chances of approval if credit’s the main problem?
- Pull your credit reports from all three bureaus (free at AnnualCreditReport.com). This isn’t optional. It’s your blueprint.
- Pay down high balances — especially those maxed-out cards. It’s a 30-day fix for your credit score in many cases.
- Dispute the junk — have errors? Call them out. Disputes can bump your score fast.
- Ask for rapid rescoring from your lender if you paid stuff off recently. It’s faster than waiting for the credit bureaus to update.
Don’t feel bad. I’ve seen Marines with flawless missions still mess up their Discover card. Life happens. The point is to fix it before moving ahead with another VA loan app.
Drowning in Debt? Time to Trim the Fat
Let’s talk DTI (debt-to-income ratio). This one’s sneaky. You might feel fine every month, but to the lender, you smell risky. The VA guideline is usually 41% max DTI, but some lenders can go higher with strong compensating factors. So how to fix VA loan disqualifiers and improve your chances of approval with DTI in the red?
- Kill small monthly payments — Pay off that last $400 of your Best Buy card and free up monthly space. Doesn’t seem like much? It is. Every little payment counts.
- Boost your income — side gigs, reliable military haz pay, BAH… document everything. The more income you prove, the better that ratio looks fast.
- Don’t co-sign for anyone — literally the worst thing for pre-approval. Their debt becomes your DTI ball and chain.
- Automate and track all big expenses — lenders want predictability. If you can show steady payments and smart spending over 60-90 days, they feel safer.
Uneven Work History? Here’s How You Tidy That Story
This one hurts because many vets transition to civilian jobs that aren’t immediately steady. Some lenders just see a 6-month gap and say, “Nah.”
If you’re self-employed, jumping between jobs, or have gaps—don’t hide it. Tell the right story with proof. What helps here if you’re looking into how to fix VA loan disqualifiers and improve your chances of approval with job history issues?
- Get letters of explanation together — one from you, one from past employers if you can. Make it make sense: military deployment, career change, illness, whatever. Show them you’re working now and stable.
- Pull tax returns and bank deposits — self-employed? Show profit for 2 full years. And yes, keep the receipts. Document your grind.
- Use residual income to your advantage — the VA allows a lower DTI if you’ve got heavy residual income. So it could save a shaky job history if your cash flow is strong.
Where’s My COE?
No COE? No VA loan. Period. Luckily, it’s usually an easy win. You can get your Certificate of Eligibility online through the VA portal, through your lender, or by mailing in VA Form 26-1880. If you’re stuck, hit up your local VA office or the lender can pull it while you’re on the phone. No COE is usually just a missing document, not a real disqualifier—until a lazy lender gives up.
Property Doesn’t Pass VA Standards? You’ve Got Options
VA appraisers are picky—for good reason. They want to make sure you’re not getting scammed into some falling-apart shack. But yeah, their standards knock out a lot of options. If the home failed because of the appraisal (MPR issues), here’s what you can do to fix VA loan disqualifiers and improve your chances of approval:
- Negotiate repairs with the seller — have your agent fight for you. Many sellers will fix stuff if they want to close.
- Get a second look — sometimes a different appraiser sees it differently, or the first one just missed context. You can appeal under “Reconsideration of Value.”
- Move to a different property — don’t fall in love with a lemon. Save your time and sanity.
I had a borrower lose a deal over a missing water heater strap. Cost to fix? $40. So yeah, these things matter.
Your Lender Might Be the Problem
Huge tip: Not every lender is great at VA loans.
Many of them say they “do VA loans” but have no clue how to navigate exceptions, waivers, or even basic eligibility. And they outsource underwriting—which is always messier. If you’ve been denied and still don’t have a clear reason, find a different lender. Seriously. reAlpha works with lenders who crush VA loans on auto-pilot.
FAQs
What is the minimum credit score for a VA loan?
The VA doesn’t set a minimum, but most lenders want at least a 620. Some go lower if other parts of your profile are strong.
Can I get a VA loan with debt collections?
Yes, but you may have to pay them off or show they’re in payment plans. It all depends on how risky they look.
Why would a VA loan get denied in underwriting?
Usually it comes down to credit, income, or the property. Sometimes a lender just doesn’t understand the rules. That’s fixable.
How can I improve my chances after being denied?
Find out the reason, fix that issue (credit, DTI, job, COE), then reapply with a lender who actually knows VA loans.
What’s residual income and why does it matter?
Residual income is your leftover
Conclusion
fixing common VA loan disqualifiers requires proactive steps to address issues like bad credit, high debt, unstable income, or missing COE. Focus on improving credit scores, reducing debt, stabilizing employment, and ensuring the property meets VA standards. If a lender is unfamiliar with VA loans, seek a more knowledgeable one. By understanding and addressing these common reasons VA loans get denied, you can significantly improve your chances of approval and move closer to homeownership.
