Most VA loan approvals in 2025 go through an Automated Underwriting System (AUS). It’s fast, powerful—and sometimes confusing.
If you received a “Refer” instead of an “Approve/Eligible,” you’re not alone. AUS doesn’t always tell the full story, especially for Veterans with unique income sources, limited credit history, or recent financial recovery.
That’s where manual underwriting can make all the difference. We help Veterans get approved with credit scores as low as 580 and review every file with real VA loan experts—not a call center or script reader.
In this guide, we’ll explain how AUS works, what it looks for, and how your income, debt, credit score, and BAH affect the outcome.
More importantly, we’ll show you what to do next if your file wasn’t approved the first time.
What Is an Automated Underwriting System?
An AUS is a digital decision-making tool used by mortgage lenders to evaluate loan applications. It uses standardized rules to assess credit, income, assets, and liabilities against VA loan requirements. The system instantly returns an underwriting result, helping speed up the process and flag any risks in your application that might require manual review.
For VA loans, lenders typically rely on one of the following systems:
- Desktop Underwriter (DU) – Powered by Fannie Mae, this AUS platform analyzes your credit profile, debt obligations, and income to determine loan eligibility.
- Loan Product Advisor (LPA) – Built by Freddie Mac, this system evaluates the same financial factors and may be used by lenders who prefer Freddie Mac’s framework.
These platforms run your financials through VA and investor rules to deliver one of several standardized findings:
- Approve/Eligible – Your loan meets all required criteria and can proceed without further review, streamlining the path to closing.
- Refer/Eligible – The file might still be viable, but a human underwriter will need to review supporting documentation to make a final decision.
- Refer/Ineligible – The file fails to meet baseline eligibility rules and is not approved in its current state.
Why Most VA Loans Go Through AUS
Lenders use AUS for VA loans because it dramatically accelerates the underwriting process. Rather than wait days for a human underwriter to comb through your documents, AUS can return a preliminary decision in minutes. It also reduces the need for full documentation if your profile is strong, making it easier to close loans quickly.
- Over 90% of VA loan files begin with AUS because it creates instant efficiency and removes human error from the early stages of underwriting.
- Lenders face fewer compliance issues and enjoy streamlined investor acceptance when AUS returns “Approve/Eligible” findings.
- Veterans benefit from not having to provide as many tax returns or bank statements if AUS accepts the base-level application and documentation.
What Happens If You Get a Refer?
A “Refer” AUS result doesn’t mean rejection. It simply means your file needs further manual review to determine whether compensating factors can justify approval. Many Veterans qualify this way, especially if they have stable employment or additional reserves that strengthen their application despite some credit or income challenges.
- Low credit scores may not meet AUS thresholds but could still be acceptable if you’ve made on-time housing payments and show positive recent credit activity.
- Non-traditional income, like combat pay or variable self-employment, may confuse AUS systems but can be manually underwritten with supporting documents.
- Collections or late payments may be outweighed by stable housing history, long-term employment, or extra cash reserves.
What Does the AUS Look At?
The AUS evaluates your complete financial profile by pulling data from your credit report, pay stubs, tax documents, and lender-submitted information. It calculates your debt-to-income (DTI) ratio, analyzes your credit score, and checks whether your income is sufficient and stable. Even if you’re close to the approval threshold, small tweaks may push you over.
- Credit score and history – AUS evaluates your FICO score and payment history to assess default risk based on historical credit behavior.
- Monthly income – This includes base pay, overtime, bonuses, and military allowances like BAH and BAS when properly documented.
- Debt-to-income ratio (DTI) – Your monthly obligations, including your future VA mortgage payment, divided by gross monthly income.
- Asset reserves – Not required for all loans, but often factored in when compensating for weaknesses in credit or income.
Can Military Income Be Used in AUS?
Absolutely. Military income plays a crucial role in qualifying for a VA loan. AUS allows lenders to include base pay, non-taxable allowances, and even disability income—often grossed up—when determining eligibility. This can improve your DTI and increase the chances of receiving an “Approve/Eligible” result.
- Base pay – Standard salary listed on your LES and verified through active-duty or military retiree pay records.
- Basic Allowance for Housing (BAH) – Non-taxable housing allowance that can significantly boost qualifying income in high-cost areas.
- Basic Allowance for Subsistence (BAS) – Often overlooked, this food allowance is also non-taxable and can be included in income calculations.
- VA disability income – Typically stable and tax-free, this is a major qualifying source that can be grossed up by 25% or more.
What If You Have Collections or Charged-Off Debt?
Collections and charged-off accounts won’t always stop an AUS approval—but they can lower your credit score or trigger a “Refer.” It depends on how recent they are, their dollar amount, and whether they’ve been resolved. Addressing these items beforehand can help you qualify through AUS or make your file stronger for manual underwriting.
- Older medical collections under $2,000 may have limited impact, but unpaid consumer accounts can drag down your FICO and DTI calculations.
- Negotiating pay-for-delete arrangements with collection agencies can quickly raise your score and improve AUS outcomes.
- Settling or removing charged-off credit cards may show positive credit rehabilitation and reduce total reported liabilities.
What If You Still Can’t Get AUS Approval?
In rare cases where neither AUS nor manual underwriting lead to approval, Veterans may consider an FHA loan as a stepping stone. FHA has more lenient credit requirements and higher DTI tolerances. You can refinance into a VA loan later once your profile strengthens or eligibility expands.
- FHA loans allow scores as low as 580 in many cases, which helps borrowers denied for VA loans due to recent credit issues.
- Once approved for FHA, Veterans can build payment history and refinance into a VA loan once AUS or manual review is favorable.
Tips to Improve Your AUS Results
Before applying, take a few weeks to optimize your profile. Small changes—like paying down balances or correcting errors—can make a big impact. This pre-work often flips a “Refer” result into an “Approve.” If you’re unsure where to start, work with a lender who offers rapid rescore tools and knows how to present VA files correctly.
- Pay down credit cards to below 30% utilization for the biggest FICO score bump in the shortest time possible.
- Make on-time payments for at least 6–12 months on all open accounts to build payment history confidence into your profile.
- Use rapid rescore services if you’ve paid off debt or removed errors and need those changes reflected immediately for AUS re-submission.
- Verify your income with clear documentation to avoid delays—especially for military pay, rental income, or bonuses.
Common Mistakes That Can Hurt AUS Approvals
- Not disclosing all income sources – Omitting BAH, BAS, or second jobs can make it appear you earn less than you do, resulting in unnecessary denials.
- Overestimating income – Lenders must use conservative figures, so projecting future raises or including inconsistent overtime can backfire.
- Ignoring small collections – Even minor unresolved debts can impact your credit score enough to trigger a “Refer.” Always address these early.
- Incorrect DTI calculation – Misclassifying obligations or forgetting monthly liabilities can result in DTI errors that flag your file as too risky.
Get Help from a VA Loan Expert
AUS is a smart system—but it’s not human. Many strong Veteran files receive “Refer” findings because of technicalities or missing data. That’s why working with a VA-savvy loan officer is crucial. They know how to structure your file, maximize income potential, and manually guide your loan to approval if the algorithm says no.
- VA experts can identify compensating factors like stable rent history or asset reserves that manual underwriters view favorably.
- Specialist lenders can reposition your profile for resubmission to AUS after strategic updates, often flipping the result to “Approve/Eligible.”
Frequently Asked Questions
What is an AUS approval for a VA loan?
An AUS approval means a computer system has reviewed your loan file and determined you meet VA and lender guidelines. It results in a faster, simpler approval process.
Can I get a VA loan without AUS approval?
Yes. If the AUS returns a “Refer” result, you can still be approved through manual underwriting with a human underwriter.
What credit score is needed to pass AUS for a VA loan?
While the VA has no minimum score, most AUS systems approve files with scores of 620 or higher. Lower scores may require strong compensating factors.
Does BAH count as income in AUS?
Yes, Basic Allowance for Housing (BAH) is counted as non-taxable income and can be grossed-up to improve your qualifying ratios.
What if my AUS says “Refer”? Can I still get approved?
Yes. A “Refer” finding means your file needs manual underwriting. Many Veterans get approved this way, especially with low credit or unique income sources.
Is manual underwriting harder than AUS?
It can be more paperwork-heavy, but not necessarily harder. Manual underwriting allows for a deeper look at your full financial picture.
Can I get preapproved if I had a Refer finding?
Yes. A lender who offers manual underwriting can still preapprove you, as long as your file meets VA residual income and credit standards.
The Bottom Line
Getting a VA loan approved often starts with AUS—but it doesn’t have to end there. Whether you receive an “Approve/Eligible” or a “Refer,” there’s almost always a path forward when working with the right lender. From grossing up your military pay to fixing credit report errors and understanding manual underwriting, the key is to work with experts who know how to present your file properly. Don’t give up if AUS says no—because a lot of Veterans still hear yes. Ready to start? Same-day approvals are often possible when you structure the loan correctly from the start.
The VA Loan Network Editorial Team is comprised of dedicated mortgage specialists and financial writers committed to providing veterans and service members with accurate, up-to-date information on VA loan benefits, eligibility, and the home-buying process.
