I guess honesty is not the best policy.

Even with a credit score north of 800 and ability to put 20% down and a net worth 3x greater than the loan amount, Pentagon Federal Credit Union denied my mortgage loan application.

This happened when I was asked to produce military orders for my move and I responded that I was retiring to my home of record. When they ran the new numbers, my retirement pay didn't meet their 43% debt ratio based on "current" income so despite my strong credit history, no unsecured/credit debt, and ability to pay the loan for the next 30 years, they said I didn't meet their criteria.

They couldn't even consider the fact that I had written job offers this summer since they required at least 2 pay stubs to include the income in the calculations.

Should be able to get a loan from someone else but was very surprised that an organization so closely tied to the military couldn't make an exception to a situation that could impact many future vets.

Give Dave Devine @ National Bank of Kansas City a call/email. He's awesome and I've done two refinances through him. NBOKS has done a ton of mil loans, all over BODN.

You're not the first person I've heard this happening to. For the same exact reason. No ability to produce proof of future income. And I second the recommendation for Dave Devine. I have done one initial purchase and two refinances with him. I'm not sure if he can get you qualified or not, but if anyone can, he can.

Agree. I have 3 houses, all thru NBOKC.

Alan Scarpa is my guy -- top notch.

Same thing happened to me with Navy Federal CU except I was trying to refinance. Same credit score and financials but they wouldn't even consider the loan without pay stubs that I couldn't get for another six months. I went as far as getting a letter from the pay department endorsed by my CO saying I was retiring honorably and stating my projected monthly pay. Still a nonstarter.

I spoke to a person that sits on their loan approval board or the like and he said their hands are tied. What really blew their mind was when I explained that the refi would lower my payment by $1K/month. They owned the existing loan so not approving the loan put me at a greater risk of not paying than approving the refi. No change in the situation but it was funny to hear him try to tap dance around that fact.

Ended up selling the house and moving. I used the Texas Veterans Land Board for my next house. Any vet buying in Texas needs to check the program out if you aren't familiar. It's a VA program that accesses different pots on money. I financed my next house 100% at 2.53%.

To a degree their hands are tied by new rules enacted after the bad loan bubble burst in '08. They can't use fuzzy math or unproven income sources in their calculations.

We did two refi's since '08 and the first one was a biatch...nobody wanted to touch us under the new rules. Our income was low for the loan (wife out with a baby) and we were relying on liquid assets to balance that out.

After getting turned down by the current mortgage-holder and NFCU we went to the bank (not a CU) that holds our investments. They also said it didn't work with the new rules. Finally we just told them that they needed to find a way to make it happen since we had assets on account worth about four times the house in question. They found a way.

Maybe credit unions are subject to more restrictions than for-profit banks?

USAA did the same thing to me when I joined the Reserves.

I'm not sure about credit unions, but I can tell you for a fact that as of today, your local 'community' bank can approve loans and mortgages based on 'character'. Just because they can doesn't mean they will of course.

I'd guess the problem for you MIL guys and gals is 1.) you probably have only dealt with the federal credit unions up until this point 2.) you might not have been anywhere long enough to establish community roots. In most cities and counties, there's usually dominate community bank and that is usually the one that is aggressive and more willing.

One would think, given the scenarios mentioned in the above posts, that a community bank in the county in which you want to settle down could see through the BS and finance you guys given your situations.

YMMV

This is a result of the "liar loan bubble" that burst in 2008. You now have to "prove" that you can pay your mortgage to get the loan.

With that line of thinking, one would also think that if you've been doing business with the same institution (USAA/NFCU) for 20+ years, have an 800+ credit rating, no other bills than the mortgage, and assets in the same institution in excess of 3-4 times the amount requested, that it should be easy if, in fact, they can use character and personal history for approval. They claim to cater to military and restrict their membership, but they have no vehicle in place when it comes to mortgages during the transition to retirement....even refinances that actually lower the chances at defaulting.

Then again, I'm not surprised. It would be a tough sell to lobby for an exception to the rules that would be targeting the 17% (of the 1% of the total population) who get to retirement. It is even a smaller number who would actually need the exception.