Many new borrowers who inquire about a VA Loan often wonder who sets the guidelines, the lender or the VA. It may seem confusing at first, but the truth of the matter lies in the fact that the guidelines set forth are administered by the VA, and the lender must follow a strict set of guidelines. A VA Loan is designed and developed by the Veterans Administration and the lender must comply with the VA in order to sell the loans.
Why the VA Does not Offer Loans Directly
In simple terms, the VA does not have time to administer a loan from application to final closing. That is why the VA builds the loan program from scratch including all the loan guidelines and leaves the administering of the loan to private lenders. However, private lenders are not free to pick and choose who qualifies and who does not qualify. They must follow a strict set of guidelines laid out by the Veterans Administration or face losing their ability to offer a VA Loan. This could cost the lender millions of dollars in business if they are no longer able to offer any type of VA Financing.