Historically, the VA has provided very little guidance in several areas of lending. That practice is changing with the following clearly defined guidelines becoming effective May 23, 2019.
- Gift funds are acceptable from a donor who has NO affiliation with the builder, developer, real estate agent, or any other interested party to the transaction.
- Rental payment history on manually underwritten loans to cover a 24-month time frame directly from the landlord, through information documented on a credit report or by cancelled checks.
- If the Borrower’s payment history before a Deed in Lieu of or Short Sale was satisfactory, a waiting period from the date of transfer of the property may not be necessary.
- If a foreclosure, Deed in Lieu of or Short Sale is in conjunction with a bankruptcy, use the latest date of either the discharge of the bankruptcy or the transfer of title on the affected home to establish the beginning date of the re-establishment of credit.
- Spousal support may once again be treated as a reduction of income.
- Child support payments will continue to be treated as a monthly liability.
- Digital signatures are acceptable.
- Borrowers with multiple properties must have 3-months PITI documented for each property in order to count rental income.
Although this is helpful for lenders, the above clarifications may cause new hurdles for VA borrowers.