CLICK HERE FOR TEMPORARY COVID-19 GUIDELINES VA Underwriting Guidelines Version 1.8.2021 PURCHASE CASH-OUT/REGULAR REFINANCE VA EEM HIGH BALANCE INTEREST RATE REDUCTION REFINANCE LOAN (IRRRL) CLICK HERE FOR TEMPORARY COVID-19 GUIDELINES FCM VA UNDERWRITING GUIDELINES 1.01 Table of Contents 1.02 Program Overview ............................................................................................................................ 6 1.02.01 Multiple Risk Layering ........................................................................................................... 7 1.03 Program Terms .................................................................................................................................. 8 1.03.01 Program Code ....................................................................................................................... 8 1.03.02 Term ...................................................................................................................................... 8 1.03.03 Loan Type .............................................................................................................................. 8 1.03.04 Occupancy Type .................................................................................................................... 8 1.03.05 Loan-To-Value ....................................................................................................................... 9 1.03.06 VA Funding Fee ..................................................................................................................... 9 1.03.07 Maximum Loan Amount ..................................................................................................... 12 1.03.08 Entitlement/Guaranty Calculations .................................................................................... 13 1.03.09 Acceptable AUS Findings ..................................................................................................... 14 1.03.10 AUS Reduced Documentation ............................................................................................. 15 1.03.11 VA Prior Approval Loans...................................................................................................... 15 1.03.12 Secondary Financing ........................................................................................................... 17 1.03.13 Sales Contracts .................................................................................................................... 18 1.03.14 Escrows ............................................................................................................................... 19 1.03.15 Repair Escrows .................................................................................................................... 19 1.03.16 Ineligible Transactions ........................................................................................................ 20 1.03.17 VA EEM Mortgages ............................................................................................................. 20 1.03.18 VA High Balance Transactions ............................................................................................. 23 1.03.19 Manufactured Homes Requirements and Restrictions ....................................................... 23 1.04 Borrower Eligibility .......................................................................................................................... 25 1.04.01 Eligible Borrowers ............................................................................................................... 25 1.04.02 Certificate of Eligibility ........................................................................................................ 27 1.04.03 Ineligible Borrowers ............................................................................................................ 28 1.04.04 Non-Occupant Co-Borrowers .............................................................................................. 29 1.04.05 Power of Attorney (POA) .................................................................................................... 29 Section 1.01 Return to Page 1 VA Programs 1.8.2021 Underwriting Guidelines Page 2 of 107 CLICK HERE FOR TEMPORARY COVID-19 GUIDELINES 1.04.06 CAIVRS and LDP/GSA ........................................................................................................... 31 1.04.07 Social Security Number Verification ................................................................................... 31 1.05 Employment & Income ................................................................................................................... 32 1.05.01 Overview ............................................................................................................................. 32 1.05.02 Length of Employment ........................................................................................................ 32 1.05.03 Salaried or Hourly Wage Earner .......................................................................................... 32 1.05.04 Military Income Sources...................................................................................................... 34 1.05.05 Self-Employed ..................................................................................................................... 36 1.05.06 Commission Income ............................................................................................................ 38 1.05.07 Rental Income ..................................................................................................................... 39 1.05.08 Other Types of Income ........................................................................................................ 40 1.05.09 New Employment ................................................................................................................ 46 1.05.10 Contracts and Offer Letters ................................................................................................. 46 1.05.11 Non-Taxable Income ........................................................................................................... 46 1.05.12 Temporary Leave/Short Term Disability ............................................................................. 47 1.05.13 Income Types Not Addressed ............................................................................................. 48 1.05.14 Unacceptable Sources of Income ........................................................................................ 48 1.05.15 4506-C Requirements ......................................................................................................... 49 1.05.16 IRS Tax Transcript Requirements ........................................................................................ 49 1.05.17 Amended Tax Returns ......................................................................................................... 52 1.05.18 Residual Income .................................................................................................................. 52 1.05.19 Unreimbursed Employee Business Expenses ...................................................................... 54 1.06 Assets & Reserves ........................................................................................................................... 55 1.06.01 Cash on Hand ...................................................................................................................... 55 1.06.02 Checking and Savings Accounts and Certificates of Deposit ............................................... 55 1.06.03 Stocks, Bonds, and Mutual Funds ....................................................................................... 56 1.06.04 Retirement Accounts (Employer Held) ............................................................................... 56 1.06.05 Retirement Accounts (Privately Held) ................................................................................. 56 1.06.06 Gift Funds ............................................................................................................................ 57 1.06.07 Gift of Equity ....................................................................................................................... 59 1.06.08 Proceeds from the Sale of Property .................................................................................... 59 1.06.09 Borrowed Funds .................................................................................................................. 59 1.06.10 Earnest Money Deposit ....................................................................................................... 59 1.06.11 Contributions by Interested Parties .................................................................................... 59 1.06.12 Seller-Funded Down Payment Assistance ........................................................................... 60 1.06.13 Ineligible Funds ................................................................................................................... 60 1.06.14 Large Deposits ..................................................................................................................... 60 1.06.15 Reserve Requirements ........................................................................................................ 60 Section 1.01 Table of Contents Return to Page 1 VA Programs 1.8.2021