Why VA Loans Fail: Tips to Boost Your Approval Odds

by | VA Loans | 1 comment

Navigating the home buying process can feel like a high-stakes game, especially when you’re leveraging VA loans. These loans offer incredible benefits for veterans and active-duty service members, but you might wonder about their reliability. How often do VA loans fall through, and what can you do to prevent it?

Understanding the ins and outs of VA loans is crucial to ensure your journey to homeownership is as smooth as possible. With their unique requirements and benefits, it’s essential to grasp why and how these loans might not reach closing. This knowledge not only prepares you but also empowers you to take proactive steps toward securing your dream home.

In the following sections, we’ll dive deep into the factors that influence VA loan success rates. You’ll learn the common hurdles and how to navigate them, ensuring you’re well-equipped to make your homeownership dreams a reality.

Understanding VA Loans

VA loans offer a powerful option for veterans and active-duty service members to achieve homeownership. Unlike conventional loans, VA loans come with the backing of the Department of Veterans Affairs, a feature that facilitates numerous benefits, including no requirement for a down payment and no private mortgage insurance (PMI). Understanding these loans fully ensures you can navigate the home buying process effectively.

Eligibility Requirements: To qualify, you must meet specific service duration requirements, and you’ll need a Certificate of Eligibility (COE). Your COE proves to lenders that you meet the minimum service requirement.

Benefits of VA Loans: The most notable advantages include the ability to finance up to 100% of a home’s value and more lenient credit requirements compared to traditional loans. Additionally, VA loans offer competitive interest rates, which can result in lower monthly payments.

Loan Limits and Funding Fees: Although VA loans do not have a maximum loan amount, there is a limit to the VA’s guaranty, which varies by county. Borrowers also pay a funding fee, which can be financed into the loan amount. This fee varies based on the type of loan and the borrower’s military service. However, exceptions exist for disabled veterans and some surviving spouses.

Property Requirements: Properties financed with VA loans must meet the VA’s Minimum Property Requirements (MPRs) to ensure they are safe, structurally sound, and sanitary. These MPRs cover a range of conditions, from the property’s roofing to its electrical and plumbing systems.

Navigating the intricacies of VA loans empowers you to utilize this valuable benefit fully. By understanding the eligibility, benefits, limitations, and property requirements, you’ll be better positioned to align your homeownership goals with the most suitable financing option. Engaging with the process knowing these essentials helps in reducing the instances where VA loans might fall through.

Common Reasons Why VA Loans Fall Through

Understanding the reasons VA loans sometimes fail is crucial for veterans and active-duty service members aiming for homeownership. Despite the VA loan program’s benefits, such as 100% financing and no private mortgage insurance, several factors can derail the process. Here, we explore common stumbling blocks that could prevent loan approval or disrupt a successful closing.

  1. Credit Score Issues: VA loans are lenient about credit scores compared to conventional loans, but lenders still require a minimum score. Falling below this threshold can stop a loan in its tracks.
  2. Insufficient Income or Employment History: Stable income and a solid employment history assure lenders you can make your mortgage payments. Lack of stability or insufficient income relative to debt can be problematic.
  3. Appraisal Shortfalls: The home must meet or exceed the loan amount in an appraisal. If an appraisal comes in low, the loan amount might not cover the purchase, leading to loan denial unless the difference is paid out of pocket.
  4. Home Condition and VA Appraisal Guidelines: Properties financed with VA loans must meet specific safety, security, and structural integrity standards. Homes that fail these conditions require repairs before proceeding, which can halt the process if sellers are unwilling or unable to make the necessary changes.
  5. Title Issues and Unresolved Liens: Any problems with a property’s title, such as unresolved liens or disputes over property boundaries, can delay or derail the loan process.
  6. Changes in Financial Situation: Significant changes to your financial situation, like a job loss or a newly acquired debt, during the loan process can affect your loan eligibility.
  7. Loan Limit Concerns: If you’re looking at homes that exceed local VA loan limits, you might struggle to secure financing without a significant down payment, despite the usual no down-payment benefit of VA loans.

By recognizing and preparing for these potential pitfalls, you’re better equipped to navigate the VA loan process successfully. Staying informed and working closely with a knowledgeable lender can alleviate many of these issues, leading you closer to securing your new home.

Statistics: How Often Do VA Loans Fall Through?

Navigating the complexities of VA loans, you’ve learned about the eligibility, benefits, and common hurdles that can hinder the process. It’s crucial to quantify these challenges to better understand the landscape of VA loan approval rates and the frequency of loan failures. Diving into statistics reveals insights into how often VA loans fall through.

Recent data suggests that VA loans exhibit a relatively high success rate compared to other types of loans. Generally, the approval rate for VA loans stands impressively around 73%, indicating a strong likelihood of success for eligible veterans and active-duty service members. However, this also means that approximately 27% of these loans do not finalize. This failure rate can be attributed to various factors previously outlined, including credit issues, appraisal discrepancies, and sudden financial changes among applicants.

It’s important to note that the overall success of VA loans is also buoyed by their competitive interest rates and no down payment requirement. These factors make VA loans more accessible and appealing, reducing the overall risk of loan failure. Industry studies have shown that VA loans are 40% less likely to fall through during the underwriting process than conventional loans. This advantage highlights the effectiveness of VA loans in meeting the needs of veterans and service members.

Despite these favorable statistics, applicants can further reduce the risk of their VA loan falling through by preparing thoroughly. Ensuring credit scores meet the lender’s requirements, maintaining stable income, and selecting properties that meet VA standards can significantly improve one’s chances. Collaborating closely with a lender who has extensive experience with VA loans can also prove invaluable.

Understanding these statistics empowers you to approach your VA loan application with confidence, knowing what factors can affect the outcome and how to mitigate them. Remember, navigating the VA loan process successfully often requires attention to detail and proactive preparation.

Tips to Prevent Your VA Loan From Falling Through

Given the 73% approval rate for VA loans and the significant impact of the 27% failure rate, it’s imperative to adopt strategies that will safeguard your VA loan application from rejection. By focusing on the preparation and qualifications, you can significantly enhance your odds of success. Below are actionable tips to ensure your VA loan doesn’t fall through.

Maintain a Stable Income and Employment History

Lenders scrutinize your income and employment history to assess your ability to repay the loan. Stability in your job and a reliable income stream reassure lenders of your financial viability. Aim to avoid changing jobs or becoming self-employed shortly before applying for a VA loan.

Improve and Monitor Your Credit Score

Though VA loans are forgiving regarding credit scores, a higher score can facilitate the approval process. Regularly check your credit report for errors and work on reducing outstanding debt to boost your score.

Save for Closing Costs

Even though VA loans do not require a down payment, there are still closing costs involved. Setting aside funds to cover these expenses shows lenders your financial preparedness and commitment to the home buying process.

Obtain Pre-approval

Getting pre-approved for a loan accelerates the home buying process and gives sellers confidence in your offer. It also gives you a clear understanding of how much you can afford, narrowing your home search to properties within your budget.

Choose an Experienced VA Lender

Partnering with a lender experienced in VA loans can make a significant difference. They’re familiar with the VA’s requirements and can navigate the process efficiently, reducing the risk of unexpected issues.

By adhering to these tips, you position yourself as a strong applicant for a VA loan, thereby lowering the chances of your application falling through. Engaging with the process, understanding the requirements, and taking proactive steps towards financial stability will put you in a favorable position to secure a VA loan for your new home.


Securing a VA loan is a significant step towards homeownership for veterans and active-duty service members. While the approval rate is high, understanding the potential pitfalls and how to avoid them is crucial. By maintaining a stable income, working on your credit score, saving for additional costs, getting pre-approved, and choosing a lender with VA loan experience, you’re setting yourself up for success. Remember, the effort you put into preparing your application can greatly increase your chances of a smooth loan process. With the right approach, your dream of homeownership is well within reach.


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