Why VA Loans Get Denied and What to Do If It Happens

Getting denied for a mortgage hurts.

Especially when you’ve already started looking at homes or worse, you’re under contract. But here’s the truth: a denial doesn’t always mean it’s over.

In many cases, it just means the approach, the documentation, or the timing needs to shift. Let’s walk through why VA loans get denied and what your next steps should be if it happens to you.

Common Reasons a VA Loan Gets Denied

1. Credit score or credit history isn’t where it needs to be
   • Late payments, collections, or too much revolving debt can tip the scales
   • The VA doesn’t set a minimum credit score, but most lenders do                                        
2. Insufficient income
   • Even with $0 down, you still have to meet residual income guidelines
   • If income is irregular or can’t be verified, it can cause delays or denials                             
3. High debt-to-income (DTI) ratio
   • VA is flexible, but there’s still a ceiling
   • Sometimes small debts or a car loan can push you over                                                        
4. Unstable job history or unverifiable employment
   • If your job recently changed or documents are missing, it can raise questions                          
5. Property didn’t meet VA standards
   • If the appraisal or inspection turned up major issues (like safety or structural problems), the loan may be denied unless repairs are made                                                 
6. Certificate of Eligibility (COE) issues
   • If your entitlement is already in use or there’s a gap in service records, it can delay the loan

What To Do Next

First, breathe.

Getting denied is frustrating but it’s also a chance to get clear on what needs to change. Here’s how I typically help buyers regroup:

• We get specifics: What exactly caused the denial? Credit? Income? Property?
• We build a timeline: Is this a 30-day fix, a 6-month rebuild, or a wait-and-watch situation?
• We outline your options: Sometimes another loan program (FHA, USDA, Conventional) may work in the short term
• We make a plan: Whether it’s paying down a card, improving scores, or waiting on new income, we map it out

This Doesn’t Mean You Can’t Buy a Home

It just means you need a better strategy, more time, or different paperwork. I’ve worked with buyers who were denied, got things back on track, and were under contract within 60 days. The key is not guessing it’s getting facts, and a plan that fits your situation. 

**IF YOU ARE DENIED A VA LOAN, ALWAYS ASK, IS THIS A VA GUIDELINE OR LENDER OVERLAY**

I can't stress this enough. Some banks put rules in place (overlays) that go above and beyond what the VA requires. This creates a situation where one bank may say no but the next may say yes! Always ask for details if you are denied.

If your VA loan was denied and you’re not sure what to do next, I’ll review the denial and walk you through what’s possible. There’s almost always a next step, we just need to find it.