source:
  type: guide
  id: va-m26-7-ch04-t08
  authority: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 4, Topic 8 — Automated
    Underwriting Cases (AUS)
  description: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 4, Topic 8 — Automated
    Underwriting Cases (AUS).
  coverage_tier: operative
obligations:
- id: va-m26-7-ch04-t08-full
  canonical_id: va-m26-7-ch04-t08-full
  section: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 4, Topic 8 — Automated
    Underwriting Cases (AUS)
  type: do
  tags:
  - regulator-direct
  - va
  - va-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: VA Lenders Handbook (VA Pamphlet 26-7), Chapter 4, Topic 8 — Automated
      Underwriting Cases (AUS)
    source_class: va-handbook
    source_url: https://www.benefits.va.gov/warms/pam26_7.asp
    snapshot_id: 84a199d5bffee03b
    fetched_at: '2026-05-23T01:53:52Z'
    content_hash: sha256:ed2c25537e999a4e2d8f0edd102b19b58213237b1a9caa927fddfca170b14a9c
    paragraph_quote: '8. Automated Underwriting Cases (AUS) b. Underwriter’s Certification
      Because the AUS will be making the determination that the loan satisfies credit
      and income requirements, cases receiving an “Accept” or “Approve” rating will
      not require the underwriter’s signature on VA Form 26-6393, Loan Analysis (items
      49 through 53). However, the file must still contain the Lender’s Certification
      referenced in Chapter 5 of the VA Lender’s Handbook. Continued on next page
      Change Date a. General AUS Information February 22, 2019 • This chapter has
      been revised in its entirety. VA has approved Freddie Mac’s Loan Prospector,
      Fannie Mae’s Desktop Underwriter, and VA approved proprietary lender AUS systems
      to use in connection with VA-guaranteed home loans. These systems incorporate
      VA’s credit standards and processing requirements. Lenders may use certain reduced
      documentation requirements on cases processed with approved AUS. The level of
      reduced documentation depends on the risk classification assigned. The systems
      use different terminology such as Approve or Accept. The tables in this section
      give a general description of documentation waivers. Please note that the documentation
      requirements are the same for these cases as for non-AUS cases, except for any
      differences cited in the tables. The automated systems do not approve or disapprove
      loans. They merely determine a risk classification. It is still the lenders
      underwriter’s decision whether or not to approve the loan. Although VA has approved
      the use of these systems, we are not the vendor. The terms and conditions of
      use must be negotiated directly with the provider of these systems. It is imperative
      that the data entered into the automated underwriting system be accurately verified.
      The data utilized by the system must be supported by source documentation obtained
      by the lender. Inaccurate or unverified data will result in invalidation of
      the risk classification. Under certain circumstances, it could also result in
      a finding of material misrepresentation, which could affect the validity of
      the guaranty. VA Pamphlet 26-7, Revised Chapter 4: Credit Underwriting 4-57
      8. Automated Underwriting Cases (AUS), continued c. Documentation Guidelines
      for Credit History Refer to the following table for documentation guidelines
      for credit history: Subject and Reference Documentation Classification Documentation
      Guidelines and Reductions for Refer Documentation Reductions for Accept/Approve
      Types of credit reports used in reconciliation (Topic 7 of this chapter) Use
      any of the following if ≤120 or 180-days old (existing/new constructions): All
      in-file reports, Selected in-file reports, Merged credit report, or RMCR Same
      as Refer. Explanation of discrepancies in reported debt (Topic 5 of this chapter)
      No explanation is required. Same as Refer. Rental payment history (Topic 7 of
      this chapter) Provide a 24 month rental history directly from the landlord,
      through information shown on credit report or by cancelled checks No verification
      of rent is required. Verification of significant non- mortgage debt (Topic 5
      of this chapter) Obtain direct verification for significant debts not reported
      on the credit report. Note: Significant means that the debt has a monthly payment
      exceeding 2 percent of the stable monthly income for all borrowers. Same as
      Refer. Note: Perform manual downgrade to Refer if direct verification reveals
      more than 1 by 30 day late payment in the past 12 months for any of the omitted
      debts. Continued on next page VA Pamphlet 26-7, Revised Chapter 4: Credit Underwriting
      4-58 8. Automated Underwriting Cases (AUS), continued c. Documentation Guidelines
      for Credit History, continued Refer to the following table for documentation
      guidelines for credit history: Subject and Reference Documentation Classification
      Documentation Guidelines and Reductions for Refer Documentation Reductions for
      Accept/Approve Mortgage payment history (Topic 7 of this chapter) Obtain direct
      verification when ratings are not available on mortgages that are any of the
      following: • Outstanding, • Assumed, or • Recently retired. A written explanation
      of mortgage payment history is required for borrowers with more than 1 by 30
      day late payment for all mortgages for the past 12 months. Perform manual downgrade
      to Refer for any mortgage debt with more than 1 by 30 day late payment in the
      past 12 months. Account balances (Topic 7 of this chapter) If a mortgage or
      other significant debt is listed on the credit report as past due and was last
      updated ≥90 days, verify current status of past due debt. Same as Refer, however
      if rating is currently ≥90 days past due, manually downgrade to Refer. Derogatory
      credit information (Topic 7 of this chapter) Obtain explanation for derogatory
      credit. Explain assessment of creditworthiness on VA Form 26- 6393, Loan Analysis.
      No determination of credit worthiness is required. Continued on next page VA
      Pamphlet 26-7, Revised Chapter 4: Credit Underwriting 4-59 8. Automated Underwriting
      Cases (AUS), continued c. Documentation Guidelines for Credit History, continued
      Refer to the following table for documentation guidelines for credit history:
      Subject and Reference Documentation Classification Documentation Guidelines
      and Reductions for Refer Documentation Reductions for Accept/Approve Alimony
      and/or child support payments (Topic 2 of this chapter) Provide the following:
      • Proof of deposits on bank statements for 3 months, and • Front page and details
      of support payments from the divorce decree, indicating evidence of at least
      3 years continuance. Same as Refer. d. Documentation Guidelines for Borrower(s)
      Not Self-Employed Refer to the following table for documentation guidelines
      for employment/income for borrower(s) who are not self-employed: Subject and
      Reference Documentation Classification Documentation Guidelines and Reductions
      for Refer Documentation Reductions for Accept/Approve Employment gaps (Topic
      2 of this chapter) No explanation for employment gaps is required if the gaps
      are ˂30 days. No explanation for employment gaps is required if gaps are ˂60
      days. Verifying current employment for borrowers who are not self-employed (Topic
      2 of this chapter) Document telephone contact verifying borrower’s current employer.
      Use pay stubs covering at least 1 full month of employment and contains the
      following: • Year-to-Date (YTD) information, • Bonus information, and • Overtime
      information. Same as Refer. Continued on next page VA Pamphlet 26-7, Revised
      Chapter 4: Credit Underwriting 4-60 8. Automated Underwriting Cases (AUS), continued
      d. Documentation Guidelines for Borrower(s) Not Self-Employed, continued Refer
      to the following table for documentation guidelines for employment/income for
      borrower(s) who are not self-employed: Subject and Reference Documentation Classification
      Documentation Guidelines and Reductions for Refer Documentation Reductions for
      Accept/Approve Verifying previous employment (Topic 2 of this chapter) Use a
      VOE or any of the following, covering the 2-year period prior to closing: •
      W-2 Forms, or • Income information obtained from the IRS via one of the following
      forms: □ Form 8821, Tax Information Authorization, (or alternate form acceptable
      to the IRS that collects comparable information) or □ Form 4506, Request for
      Copy of Tax Return, (or alternate form acceptable to the IRS that collects comparable
      information). • No VOE or W-2 Forms are required for a borrower on active duty.
      • The Leave and Earning Statement (LES) should be used. No VOE is required if
      the borrower has been with the same employer for 1 year and W-2 Forms for 1
      previous year have been collected. No W-2 Forms are required for a borrower
      on active duty. No W-2 Forms are required if all of the following are met: •
      Borrower is with the same employer >2 years • Employer phone contact verifies
      the length of employment and current status (still employed) • Borrower is not
      self- employed or commissioned • Bonus, overtime, or secondary income is not
      needed to qualify • Stable monthly income is to be determined by using current
      base pay only (rather than total earnings) • Borrower signs one of the following
      for the previous 2 tax years: o Form 8821, and o Form 4506. Continued on next
      page VA Pamphlet 26-7, Revised Chapter 4: Credit Underwriting 4-61 8. Automated
      Underwriting Cases (AUS), continued e. Documentation Guidelines for Borrower(s)
      Self- Employed Refer to the following table for documentation guidelines for
      employment/income for borrower(s) who are self-employed: Subject and Reference
      Documentation Classification Documentation Guidelines and Reductions for Refer
      Documentation Reductions for Accept/Approve Individual tax returns for self-
      employed borrowers (Topic 2 of this chapter) Provide one of the following, with
      all line items captured: • signed copies of individual tax returns for the most
      recent 2- year period or tax transcripts, or • individual income information
      obtained from the IRS via one of the following forms: • Form 8821 (or an alternate
      form acceptable to the IRS that collects comparable information) or • Form 4506
      (or an alternate form acceptable to the IRS that collects comparable information).
      Same as Refer. Continued on next page VA Pamphlet 26-7, Revised Chapter 4: Credit
      Underwriting 4-62 8. Automated Underwriting Cases (AUS), continued e. Documentation
      Guidelines for Borrower(s) Self-Employed, continued Refer to the following table
      for documentation guidelines for employment/income for borrower(s) who are self-employed:
      Subject and Reference Documentation Classification Documentation Guidelines
      and Reductions for Refer Documentation Reductions for Accept/Approve Balance
      sheets and profit and loss statements for self- employed borrowers (Topic 2
      of this chapter) No balance sheet or YTD Profit and Loss (YTD P&L) is required
      if origination date is < 7 months from the business’ fiscal year end (for which
      tax returns or information from the IRS via Form 8821 or Form 4506 were provided).
      No balance sheet or YTD P&L is required. Business tax returns for self-employed
      borrowers (Topic 2 of this chapter) Provide one of the following, with all line
      items captured: • Signed copies of business tax returns for the most recent
      2-year period. • Business income information obtained from the IRS via one of
      the following forms: o Form 8821 (or an alternate form acceptable to the IRS
      that collects comparable information) or o Form 4506 (or an alternate form acceptable
      to the IRS that collects comparable information). No business tax returns are
      required if all of the following conditions are met: • Borrower proves ownership
      of the business for at least the past 5 years. • Individual tax returns reflect
      consistent income for the past 2 years. • Funds for downpayment or closing costs
      are not from the business. Continued on next page VA Pamphlet 26-7, Revised
      Chapter 4: Credit Underwriting 4-63 8. Automated Underwriting Cases (AUS), continued
      f. Documentation Guidelines for Assets Refer to the following table for documentation
      guidelines for assets: Subject and Reference Documentation Classification Documentation
      Guidelines and Reductions for Refer Documentation Reductions for Accept/Approve
      Verify assets to close in the borrower’s name (Topic 4 of this chapter) Provide
      bank/asset statements covering the most recent 2- month period in lieu of a
      Verification of Deposit (VOD). Provide bank/asset statements covering most recent
      1- month period in lieu of a VOD. VA Pamphlet 26-7, Revised Chapter 4: Credit
      Underwriting 4-64'
  judgment: false
