Veterans United Home Loans is a registered DBA of Mortgage Research Center, LLC, an affiliate of Three Creeks Media.
Most homebuyers assume getting approved for a mortgage is a straightforward process. You submit your application, provide documentation verifying your income and assets, and wait for the lender to determine whether you qualify. If you're approved, you move forward. If you're denied, the natural assumption is that your finances simply weren't strong enough.
But what happens when one lender approves your mortgage while another says no?
It's a scenario that surprises many borrowers, yet it's far more common than most people realize. Although mortgage lenders generally follow the same agency guidelines, they don't all evaluate borrowers the same way. Every lender has its own approach to managing risk, interpreting underwriting guidelines, and deciding which loans fit its business model.
During a recent episode of the Real Estate Update podcast, Jenna Gonzales, Associate Director of Capital Markets at Veterans United, pulled back the curtain on how underwriting decisions are made. Her insights reveal why borrowers can receive different answers from different lenders – and why a mortgage denial doesn't always have to be the end of the road.
Mortgage Underwriting Isn't One-Size-Fits-All
Most borrowers think every mortgage lender follows the exact same set of rules.
In reality, every major loan program starts with guidelines established by the agency backing the loan. FHA loans follow standards set by the Federal Housing Administration, VA loans follow guidance from the Department of Veterans Affairs, and conventional loans generally follow guidelines established by Fannie Mae and Freddie Mac.
Those guidelines create the framework lenders must follow, but they aren't the only rules in play.
"If you're going to originate those loan types, you have to meet agency guidelines," Gonzales explained. "But most people don't operate that way." Instead, lenders often establish additional internal requirements based on the investors purchasing their loans, their own experience, and the amount of risk they're comfortable accepting.
Within the mortgage industry, those additional requirements are commonly referred to as overlays.
Some lenders may require a higher minimum credit score than the agency itself requires. Others may apply stricter documentation standards for self-employed borrowers or additional requirements for certain property types. Those differences can dramatically affect whether a borrower receives an approval or denial.
As Gonzales put it, "We're all given the same playbook. The agencies give us the same guidelines. We can all look at the same exact guideline but interpret it differently."
Mortgage Approval Is About More Than a Credit Score
One of the biggest misconceptions about mortgage underwriting is that approval hinges on a single number.
Ask prospective homebuyers what underwriters care about most, and many will immediately point to credit scores. While credit certainly plays an important role, Gonzales says it's only one piece of a much larger picture.
Rather than focusing on one metric, underwriters evaluate whether borrowers have both the ability and the willingness to repay the loan.
Ability refers to a borrower's financial capacity. Do they have sufficient income? Is their employment stable? Are their existing debt obligations manageable? Do they have enough savings to weather unexpected expenses?
Willingness, on the other hand, is reflected in a borrower's financial behavior.
"We're trying to put people in homes when they're ready for home ownership," Gonzales said. "You have the ability – you have the income coming in – but your behavior on your credit report maybe doesn't look like you have the willingness. Our guidelines are looking to cover both of those areas."
That philosophy helps explain why borrowers with similar credit scores sometimes receive very different underwriting decisions. A borrower with years of stable employment, consistent bill payments, and strong cash reserves may represent less overall risk than someone with a higher credit score but limited savings or a more volatile financial history.
Rather than searching for one reason to approve or deny a loan, experienced underwriters evaluate the complete financial picture.
Among the factors they commonly consider are:
- Income stability and employment history
- Debt-to-income ratio and monthly financial obligations
- Available savings and cash reserves
- Credit history and repayment patterns
- Property type and occupancy
- Compensating factors that strengthen the overall application
Looking at these factors together gives underwriters a much more complete understanding of whether someone is prepared for the long-term responsibilities of homeownership.
Underwriting Guidelines Are Constantly Evolving
Many consumers assume underwriting guidelines remain largely unchanged from year to year.
In reality, Gonzales says they're continually being reviewed and refined.
At Veterans United, a dedicated risk team meets every two weeks to evaluate existing guidelines, discuss feedback from loan officers and underwriters, and determine whether changes should be made. Those discussions also include input from the company's servicing and training teams, ensuring multiple perspectives are considered before adjustments are implemented.
The company made roughly 50 guideline changes in a recent year alone.
Those updates aren't based on guesswork.
According to Gonzales, Veterans United services approximately 150,000 mortgages, giving the company an enormous amount of real-world performance data to analyze.
"We have 150,000 opportunities to see how did our guidelines actually play out in real life," Gonzales explained.
That information allows the company to identify trends that aren't always obvious from theoretical lending models. If borrowers with certain characteristics consistently perform well, guidelines may be adjusted to expand access to financing. If new risks emerge, standards can be strengthened to protect both borrowers and the lender.
Small Changes Can Open Doors for More Borrowers
When people hear that underwriting guidelines have changed, they often assume those changes are dramatic.
More often than not, they're relatively small.
But according to Gonzales, those incremental improvements can collectively have a meaningful impact on homebuyers.
"We do a lot of tweaks that open up opportunities for a lot of borrowers," she said. "One guideline change isn't going to impact a ton of borrowers necessarily, but the constant change and small tweaks we make – that's making sure our pool is pretty broad."
She pointed to manufactured-home financing as one example.
After reviewing the performance of borrowers purchasing manufactured homes, Veterans United determined those loans weren't performing significantly differently than loans secured by traditional site-built homes. As a result, the company became comfortable lowering its minimum credit score requirement for certain manufactured-home loans.
Individually, that change affected only a subset of borrowers.
Collectively, however, it allowed more qualified families to become homeowners without substantially increasing lending risk.
The company also expanded its VA loan limit, providing additional flexibility for borrowers purchasing higher-priced homes.
Those examples illustrate an important point: underwriting isn't simply about limiting risk. It's also about finding responsible ways to expand access to homeownership as lenders gain more experience and confidence in their data.
Why Experience Matters in Mortgage Lending
One of the most interesting insights Gonzales shared is that experience plays a much larger role in underwriting than many borrowers realize.
While lenders may all have access to the same agency guidelines, they don't all have the same experience applying them. That experience shapes how comfortable a lender is evaluating situations that don't fit neatly into a standard checklist.
Veterans United's portfolio provides a good example: It has years of real-world data showing how borrowers perform after closing. That allows the company to evaluate whether certain underwriting standards are achieving their intended purpose or whether they can be responsibly adjusted.
A lender that originates and services a large volume of VA loans, for example, may be more comfortable evaluating complex applications because it has seen similar situations play out successfully in the past. A lender with less experience may choose to avoid that uncertainty by applying stricter overlays or denying applications that fall into gray areas.
That doesn't necessarily mean one lender is better than another. It simply illustrates that mortgage lending is not a one-size-fits-all business.
For borrowers, it's an important reminder that choosing a lender involves more than comparing interest rates. A lender's experience with your specific loan program – and its willingness to evaluate unique financial situations – can be just as important as the loan terms themselves.
A Mortgage Denial Isn't Always the End of the Story
Perhaps the most encouraging message from Gonzales is that a mortgage denial shouldn't automatically convince buyers to give up on homeownership.
Too often, borrowers assume a denial means they simply don't qualify for a mortgage anywhere. In reality, that decision may reflect one lender's internal policies rather than the borrower's overall eligibility.
Veterans United has a specialized review process for applications that don't initially meet standard underwriting guidelines. Instead of immediately declining every file, certain loans receive a second look from a dedicated team that searches for compensating factors or alternative ways to document a borrower's ability to repay.
The results speak for themselves.
"We saved around 6,000 loans last year," Gonzales said, referring to applications that initially appeared ineligible but ultimately qualified after additional review.
Not every lender has the same process, but the underlying lesson applies across the industry. A denial from one lender doesn't necessarily mean every lender will reach the same conclusion.
That's why Gonzales encourages borrowers to keep applying rather than accepting the first answer they receive.
"If you're talking to a lender and you have a denial for a specific reason," she said, "just keep calling. There's lenders out there that will have different guidelines and different risk tolerances."
Shopping around isn't just about finding the lowest interest rate. It can also help borrowers find a lender whose underwriting philosophy better fits their financial situation.
If your mortgage application is denied, consider taking these steps before giving up on buying a home:
- Ask your lender to clearly explain why your application was denied.
- Determine whether the issue is something that can be improved, such as your credit score, debt-to-income ratio, or savings.
- Speak with other lenders, especially those that specialize in the type of loan you're seeking.
- Ask whether additional documentation or compensating factors could strengthen your application.
- Continue improving your financial profile while preparing to reapply if necessary.
In many cases, understanding why you were denied is the first step toward eventually receiving an approval.
The Right Professionals Can Make the Process Easier
Buying a home is often the largest financial transaction people will make, yet many first-time buyers begin the process with little understanding of how mortgage lending actually works.
That's why Gonzales believes choosing the right professionals is one of the most important decisions borrowers can make.
"The mortgage process can be kind of complicated and it can be scary," she said. "It's the biggest financial transaction of your life."
A knowledgeable loan officer does much more than collect paperwork and quote an interest rate. They help borrowers understand available loan options, explain underwriting requirements, identify potential issues before they become major obstacles, and guide buyers through each stage of the approval process.
The same is true for an experienced real estate agent. Together, those professionals can help buyers make informed decisions instead of reacting to surprises throughout the transaction.
Above all, Gonzales says borrowers should work with people they trust.
"I think if I was looking to buy a home, that would be the most important to me," she said. "Get someone that I trust on the other side of the transaction so I feel really comfortable about what I'm moving forward with."
That advice extends beyond first-time buyers. Whether purchasing a first home, upgrading to a larger property, or buying after years away from the market, having knowledgeable professionals in your corner can make an intimidating process feel much more manageable.
The Bottom Line
Mortgage underwriting often feels like a black box. Borrowers submit stacks of financial documents, wait anxiously for a decision, and sometimes receive an answer they don't understand.
But as Jenna Gonzales explained, underwriting is far more than a simple checklist. It's a careful evaluation of whether someone is ready for the long-term responsibilities of homeownership. While every lender begins with the same broad agency guidelines, each brings its own experience, risk tolerance, and interpretation to the process.
That explains why one lender may approve a mortgage while another declines the very same application.
The good news for borrowers is that a denial doesn't necessarily signal the end of the journey. Understanding why the application was declined, continuing to strengthen your financial profile, and speaking with additional lenders can open opportunities that may not have been apparent after the first decision.
Ultimately, mortgage approval isn't just about meeting a set of minimum requirements. It's about finding the right lender – one whose experience, underwriting philosophy, and willingness to evaluate your complete financial picture align with your path to homeownership.
