VA loans are one of the best mortgage options available for eligible veterans, active-duty service members, and surviving spouses. With benefits like zero down payment, no private mortgage insurance (PMI), competitive interest rates, and flexible credit standards, it’s easy to assume VA loan approval is a sure thing.
But even with these powerful advantages, VA loans can still be denied if key requirements aren’t met. At 1st United Mortgage, we specialize in helping military families avoid the common missteps that can lead to delays—or worse, denials. In this article, we’ll explore the top reasons VA loans are denied and what you can do to move forward with confidence.
Income Isn’t Stable or Sufficient
Your ability to repay the loan is a primary factor lenders consider. If your income is inconsistent, doesn’t meet VA guidelines, or can’t be verified, the loan may be denied.
How to avoid it:
Before applying, gather your recent pay stubs, W-2s, and tax returns. If you’re self-employed or have multiple income streams, be ready to provide two years of tax history. Our team at 1st United Mortgage helps you present a complete and clear income picture to underwriters, increasing your chances of approval.
Credit Score or History Raises Red Flags
The VA doesn’t set a strict minimum credit score, but lenders do. If your score is below 580 or your report shows recent late payments, high credit utilization, or collections, your loan may be declined.
How to avoid it:
Check your credit report early. Pay down credit cards, avoid opening new accounts, and dispute any errors. We review your credit profile during preapproval and help you create a strategy to improve it if needed.
The Property Doesn’t Meet VA Standards
VA loans are meant to help veterans buy safe, livable homes. If the property doesn’t meet the VA’s Minimum Property Requirements (MPRs) or appraises below the agreed purchase price, your loan could be in trouble.
How to avoid it:
Work with a real estate agent who understands VA loans and can help you choose eligible homes. Before you make an offer, our team can help identify red flags that may complicate the VA appraisal or underwriting process.
Documents Are Missing or Incomplete
VA loans require a clear paper trail. If required documentation like your Certificate of Eligibility (COE), income records, or bank statements are missing or incomplete, the process may stall or result in denial.
How to avoid it:
Stay organized and submit documents promptly. At 1st United Mortgage, we give every borrower a custom document checklist and walk you through each requirement so there are no surprises.
Debt-to-Income Ratio Is Too High
Even though VA loans are more flexible than conventional options, there are still limits to how much monthly debt you can carry. Most lenders look for a debt-to-income (DTI) ratio of 41% or lower.
How to avoid it:
Limit your monthly obligations before applying. Pay off or reduce car payments, credit cards, or personal loans if possible. If your DTI is close to the edge, we can help identify compensating factors that strengthen your application.
COE Issues or Ineligibility
You must have a valid Certificate of Eligibility to use a VA loan. If your service history doesn’t meet the VA’s criteria or your COE can’t be verified, the loan may be declined.
How to avoid it:
Request your COE early in the process. We can often retrieve it instantly from the VA’s portal. If there are service gaps or complications, we’ll help you work through them and confirm your eligibility.
Financial Moves Made Mid-Process
Changing jobs, making a big purchase, or opening a new line of credit after preapproval can disrupt your loan. Lenders will recheck your finances before closing, and any major changes may jeopardize the loan.
How to avoid it:
Once you’re preapproved and under contract, do not make financial changes without speaking to your loan officer. At 1st United Mortgage, we encourage all clients to “freeze” their financial activity to avoid surprises at the closing table.
Working With the Wrong Lender
VA loans are unique—and not every lender is equipped to handle them correctly. A lender unfamiliar with VA requirements may delay your loan, overlook key opportunities, or even cause a denial due to technical errors.
How to avoid it:
Choose a VA loan specialist. At 1st United Mortgage, VA loans are not just one of many loan types we offer—they’re our primary focus. Our team is trained to guide military families through every nuance of VA lending, ensuring a smooth and efficient path to approval.
Not Preparing for the VA Funding Fee
Most VA borrowers pay a funding fee, which can catch first-time buyers off guard. While the fee can be financed into the loan, failing to budget for it can lead to confusion or application issues.
How to avoid it:
Understand the funding fee rates based on your service history and whether it’s your first or subsequent use. Some borrowers—like those receiving VA disability compensation—are exempt. We’ll confirm your funding fee amount and exemption status early in the process so you know exactly what to expect.
What to Do If Your VA Loan Is Denied
Loan denial doesn’t mean you’re out of options. In many cases, denials result from temporary or fixable issues—like a missing document, a need to pay off a credit card, or an ineligible property. At 1st United Mortgage, we work with denied applicants every day to identify the problem, create a plan, and help them get approved on their next application.
Work With a VA Loan Expert Who Has Your Back
The VA loan process doesn’t need to be intimidating. With the right guidance, most issues can be avoided—or quickly corrected—before they disrupt your path to homeownership. At 1st United Mortgage, we’re here to make sure your experience is smooth, transparent, and successful.
Our team specializes in VA loans and is committed to helping veterans and military families navigate every step of the homebuying journey. Whether you’re applying for your first home or trying again after a denial, we’re here to guide you through with care, clarity, and unmatched VA expertise.
Call 1st United Mortgage today at (931) 548-1985 or Visit us at 1unitedmortgage.com to speak with a VA loan specialist who understands your goals and will help you get the approval you’ve earned.