Colorado VA Lenders For Bad Credit With No Lender Overlays

In this article, we will cover and discuss qualifying for a VA loan with low credit scores with Colorado VA lenders with no overlays for bad credit. The Department of Veterans Affairs administers the VA loans Colorado credit and debt to income ratio requirements and guidelines. In this article, we will cover Colorado VA lenders with no overlays for bad credit, credit scores, and debt to income ratio on VA loans. There are two sets of mortgage guidelines on VA home loans.

Do All VA Lenders Have The Same VA Loan Requirements in Colorado?

Not all VA lenders have the same VA loan requirements. One lender may have a higher credit score requirement while another lender will not even have a minimum credit score requirement. Just because you were denied a VA loan from a lender does not mean you cannot qualify and get approved by a different lender.

The agency guidelines from the Veterans Administration on VA loans, and the second type of mortgage guidelines are the lender overlays. The Veterans administration has lenient mortgage guidelines on VA loans. In the following paragraphs, we will cover and discuss qualifying for VA loans with no lender overlays. Borrowers with less than perfect credit who have been denied a VA home loan can qualify and get approved with Colorado VA lenders with no overlays for bad credit.

VA Loan Credit Score Requirements in Colorado

Gustan Cho Associates gets countless calls from our viewers and borrowers of VA loans and questions about the conflicting answers they get from various Colorado VA lenders about the actual VA loan requirements in Colorado. Many Colorado VA lenders are telling borrowers the minimum credit scores are 620 and others are being told the VA credit score requirements are 640 FICO.

It is not just the VA loan requirements on credit scores, but many borrowers are getting conflicting reports about the debt to income ratio requirements. The key in getting approved for VA home loans with bad credit is to have the help of Colorado VA lenders with no overlays on VA loans.

What Is The Lowest Credit Score You Can Have To Get a VA Loan in Colorado?

The Veterans Affairs guarantees all VA home loans to private mortgage lenders. Due to the VA loan guarantee, lenders can offer 100% financing with no mortgage insurance at competitive rates on VA home loans. Some Colorado VA lenders are telling mortgage loan applicants debt to income ratios are 45% while others are being told the DTI on VA loans is 50%. So which is it? The actual answer is VA loan requirements from the Veterans Administration have no minimum credit score requirements. There is no maximum debt to income ratio caps on VA loans

Does VA Allow No Credit Score?

Yes, the VA does allow borrowers with no credit score to qualify for VA home loans. While no specific minimum credit score requirement is set by the VA, lenders must assess the borrower’s overall creditworthiness. Individuals who lack a credit score could be eligible for a VA home loan if the lender can verify their creditworthiness through alternative means. Colorado VA lenders are experienced in working with borrowers in such situations and can guide you through the process.

Colorado VA lenders may look at alternative credit data such as rental history, utility payments, and insurance payments for borrowers with no credit score.

Consistent, on-time payments for rent, utilities, and insurance can demonstrate financial responsibility and establish a pattern of responsible credit behavior.

Working with Colorado VA lenders who are experienced in handling VA home loans for borrowers who need a credit score is essential. These lenders can help you gather the necessary documentation and prove your creditworthiness through alternative methods.

How Can I Get Approved For a VA Loan With Bad Credit in Colorado?

Besides credit and debt to income ratio requirements, many Colorado homebuyers with a certificate of eligibility (COE) are running into conflicting lending requirements on VA loans such as collection accounts, manual underwriting, qualifying during Chapter 13 Bankruptcy repayment plan, after Chapter 13 Bankruptcy discharged date, and other lending requirements. After reading this article, you will know the facts on VA loans in Colorado and not BS.

500 Credit Score Approval With Colorado VA Lenders With No Overlays

Home prices in Colorado are pricier than in other states. However, Colorado has one of the lowest property states in the nation. Data show Colorado’s population is skyrocketing due to low cost of living, low property taxes, great scenery, beautiful landscape, majestic mountains, countless places of entertainment, beautiful summers and winters, a growing economy, and abundant job opportunities. Average wages are higher than the median wages and skilled workers have no problem landing the job of their dreams.

Best Colorado VA Lenders With No Overlays For Poor Credit 

The state of Colorado is one of the fastest-growing states in the nation. Eligible active duty and retired members of the U.S. Military can qualify for VA home loans in Colorado with credit scores down to 500 FICO. The key to getting a VA loan approved with bad credit is to have Colorado VA lenders with no overlays to help you. There are no minimum credit score requirements on VA loans. As long as you have been timely in the past 12 months on all of your payments and have the income, you should get an approve/eligible per the automated underwriting system.

How Long Does a VA Loan Pre-Approval Take?

Homebuyers can get a rock-solid pre-approval within a few hours. Getting a qualified pre-approval requires teamwork and cooperation by the borrower. Homes in Colorado are getting under contract soon after it gets listed so putting an offer in with an updated pre-approval is very important.

The real estate market is appreciating year after year in many counties of Colorado. Tens of thousands of individuals and businesses are migrating to Colorado more than any other state.

Thousands of taxpayers are fleeing high-taxed states with poor economies and high taxes to Colorado. Colorado has higher than average home prices but the property taxes are a fraction of the national median property tax rates of other states. The demand for housing in Colorado has never been stronger.

The strong demand versus a shortage of available homes is creating somewhat of an issue for homebuyers. Many homebuyers are buying homes over the list price. This was the case in early 2021. However, the craziness of buying homes over the list price has stabilized. The Colorado housing market is still competitive but not like it was in late 2020 and the first half of 2021.

Current VA Home Loan Rates in Colorado

Mortgage rates have been volatile and are over 5.0%. However, Gustan Cho Associates can offer the most competitive rates for our veterans on their home purchase. Homebuyers migrating to Colorado are buying versus renting homes. They rather purchase a home and settle down and not mess with renting a home and moving again to purchase a home.

VA home loans do not require a down payment. Lenders allow 100% financing on VA loans with no mortgage insurance premium at competitive mortgage rates. VA mortgage rates are lower than rates on conventional loans.

Why Are Many Veteran Homebuyes Moving To Colorado?

Many active and retired members of the U.S. Armed Services are migrating to Colorado due to the great economy, excellent job opportunities, low cost of living, affordable housing due to low property taxes, and great climate and landscape. The state of Colorado also has one of the largest populations of both active and retired members of the United States Military.

Many veteran home buyers either seek Colorado to be home or plan on retiring in the great state of Colorado. VA no longer has a maximum loan limit on VA loans. In this article, we will discuss and cover how you can now qualify for VA loans in Colorado with no maximum loan limits and lenient mortgage guidelines.

Prior Maximum Loan Limits On VA Loans in Colorado

Here Are The Biggest Cities With Maximum Loan Limits Prior To The Changes Of No Loan Limits On VA Loans In The State Of Colorado:

• Denver – Denver County – $529,000
• Colorado Springs -+ El Paso County – $453,100
• Aurora – Adams, Arapahoe, Douglas County- $ 529,000
• Fort Collins – Larimer County – S453,100
• Lakewood – Jefferson County – $529,000
• Thornton – Adams County – $529,000
• Arvada – Adams and Jefferson County – $529,000
• Westminster – Adams and Jefferson County – $529,000
• Pueblo – $453,100
• Centennial – Arapahoe County – $529,000

Again, the above loan limits on VA loans are null and void because there are no maximum loan limits on VA  loans as of 2020. Going into 2022, homebuyers with a VA certificate of eligibility (COE) will not have to worry about getting priced out of the housing market because there is no loan limit on VA loans.

Colorado VA Lenders With No Overlays on Agency Guidelines

VA lending can be very confusing. Most veterans do not know where to start the mortgage process. Or they get turned down by their bank and give up hope. There is hope! VA loan requirements are laxer than conforming financing.

Veteran Borrowers can find all these requirements here.

How To Get VA Loan Approval After Being Denied?

Gustan Cho Associates are mortgage brokers licensed in 48 states with over 170 wholesale mortgage lenders. Over 75% of our borrowers are folks who could not qualify at other mortgage companies. We are able to do loans other lenders cannot do. It is very common for these guidelines to be confusing.

Most lenders add overlays to VA agency mortgage guidelines. To save time and a headache call the experts at Gustan Cho Associates. Gustan Cho Associates are experts in VA financing, call us at 800-900-8569 or text for a faster response. Our team at Gustan Cho Associates is able to answer questions on your scenario. We are experts in VA Loans Colorado. For Veterans in other states, the team at Gustan Cho Associates will be able to pair you with one of our teammates on the Gustan Cho Associates.

Buying House in Colorado With VA Loans With No Money

Gustan Cho Associates are experts in helping homebuyers purchase a home in Colorado with no money out of pocket. We do not require any down payment. Closing costs can be covered with seller concessions and/or lender credit. We can structure a way where the homebuyer does not have to put up any of their own money.

Citizens of Colorado know that property values of skyrocketed over the past 5 years. This makes it hard for many Veterans to obtain a home.

Most counties in the United States of America used to have VA loan limits that mirror the limits for conventional financing. The good news is a select number of counties in Colorado have increased loan limits. For example, if you live in Pitkin County is considered a high-cost area.

It is possible to buy a home with a VA in this county for $679,650 with 100% financing. The funding fee for the VA loan will be added to that loan amount and can be financed into your payment. Again, there are no maximum loan limits on VA loans at Gustan Cho Associates.

VA Loans With Collections and Charged-Off Accounts

Homebuyers with poor credit can qualify for VA loans in Colorado with outstanding collections and charged-off accounts. You do not have to pay outstanding collections and/or charged-off accounts to qualify for VA loans in Colorado. The VA does not set limits on the amount veteran borrowers can finance to use a VA loan.

It used to have a limit on the amount they will they can assume the liability. The VA loan limits do follow the same limits as Fannie Mae and Freddie Mac. These limits used to be put in place under the provisions of the Housing and Economic Recovery Act of 2008. Please check back annually as these loan limits do change. It was important to understand that loan limits and the amount of entitlement a veteran has are not the same. The basic entitlement currently offered to veterans is $36,000. However, the VA no longer has maximum loan limits on VA loans.

VA Maximum Loan Limit in Colorado

VA loans no longer have loan limits on VA loans. We will go over how VA loans used to work back in the day. Here is a case scenario on how down payments used to be calculated on VA loans:

For VA homes less than the county limit. This example will use a county limit of $453,100:

Assuming you have full entitlement ($36,000) and veterans want to buy a home for $350,000.

• $453,100 * 25% = $113,275
• Meaning $113,275 will be the maximum guaranty for available entitlement
• $350,000 * 25% = $87,500

In the above example, the veteran has a guaranty or the lesser of 25% of the county loan limit or 25% of the loan amount.  As seen above the VA will guarantee 25% of the loan amount or $87,500. Since $87,500 is less than the maximum of $113,275 (county limit), a down payment should not be necessary. However, this no longer holds true because there are no maximum loan limits on VA loans.

What is the Lowest Credit Score VA Lender?

The lowest credit score requirement for Colorado VA lenders can vary depending on the lender. The VA doesn’t establish a minimum credit score requirement for VA home loans. Still, most lenders usually ask for a score of approximately 620.

However, specific Colorado VA lenders, such as Gustan Cho Associates, could authorize VA home loans for individuals with credit scores of 580 or less in certain cases. It’s crucial to compare Colorado VA loan providers to find one that can cater to your credit situation.

Colorado High-Balance VA Jumbo Loans

Now let’s explore an example of a home in a high balance area of Colorado. Any VA loan with higher than the conforming loan limits is called VA Jumbo Loans or High-Balance VA loans. This example will take place in a single-family home in Summit County. Summit County has a one-unit loan limit of $679,650. This is an example of how VA loans used to be calculated with maximum loan limits:

• Assuming you have full entitlement ($36,000) and you want to buy a home for $679,650
• $679,650 * 25% = $169,912
• Once again meaning $156,250 will be the maximum guaranty of available entitlement
• $169,912 / $679,650 = 25% guaranty

Since the guaranty is equal to a 25% guaranty the VA allows, a down payment should not be needed.

Case Scenario on How VA Loans Used To Be Calculated When There Were Loan Limits

Let’s go over an example of how VA loan limits worked before they were eliminated. Suppose a veteran is buying a home in Denver County, where the loan limit for 2024 is $645,550.

Assuming the veteran has full entitlement ($36,000) and wants to buy a home for $800,000:

• $645,550 * 25% = $161,387.50. This represents the maximum guaranty for full entitlement.
• $161,387.50 / $800,000 = 20.17% guaranty.

In this example, the VA’s guarantee is less than 25%, meaning home buyers will need a down payment to meet investor requirements.

Here’s how the down payment would be calculated:

• $800,000 * 25% = $200,000
• $200,000 – $161,387.50 = $38,612.50 down payment.

This down payment is less than 5%, which is still favorable compared to other loan options. For a Jumbo Mortgage, you typically need at least a 10% down payment and may require mortgage insurance. So, at a minimum, you would be putting down $80,000 in this example. For an FHA loan, you would need to put down $140,000.

Even with the purchase price exceeding the loan limit, your VA loan will most likely be the best option due to the favorable terms and lower down payment requirements.

This example illustrates how VA loans with higher loan balances were previously calculated. However, as of 2024, VA loans no longer have maximum loan limits, providing greater flexibility for veteran homebuyers. Additionally, current interest rates for VA home loans in 2024 are competitive, often lower than conventional loan rates, which further benefits veterans purchasing homes.

VA Loan Requirements in High-Cost Areas

As of 2024, VA loan limits have been updated for Colorado. Some notable counties that are considered high-cost areas include:

• Adams – $645,550
• Arapahoe – $645,550
• Boulder – $726,200
• Broomfield – $645,550
• Clear Creek – $645,550
• Denver – $645,550
• Douglas – $645,550
• Eagle – $1,089,300
• Elbert – $645,550
• Garfield – $1,089,300
• Gilpin – $645,550
• Jefferson – $645,550
• Lake – $1,089,300
• Park – $645,550
• Pitkin – $1,089,300
• Routt – $1,089,300
• San Miguel – $1,089,300
• Summit – $1,089,300

Please note that while these are the updated loan limits for these high-cost areas, VA home loans no longer have a maximum loan limit as of 2020. This means veterans can obtain VA home loans for amounts above these limits. However, lenders may impose their own limits and requirements.

Can I Buy a House Using VA Loan in Colorado Even With Bad Credit?

Buying a house in Colorado with a VA home loan is possible, even if you have poor credit. The VA does not set a specific credit score requirement, but most lenders in Colorado providing VA loans typically anticipate a credit score of around 620. However, some Colorado VA lenders are willing to approve VA home loans for borrowers with scores as low as 580 or even lower in certain circumstances.

It’s essential to shop around and compare different Colorado VA lenders to find one that can accommodate your credit profile.

To enhance the likelihood of approval for a VA home loan with poor credit, it is advisable to enhance your credit score by reducing debt, ensuring punctual payments, and addressing any inaccuracies on your credit report. Moreover, seek out Colorado VA lenders with expertise in assisting borrowers with lower credit scores.

Presenting compensating factors such as a steady income, a favorable debt-to-income ratio, and a significant down payment can also be beneficial. Obtaining pre-approval from a Colorado VA lender can clarify affordability and demonstrate seriousness to sellers.

VA Loans During Chapter 13 Bankruptcy in Colorado

Another group of veteran borrowers Gustan Cho Associates helps is veteran home buyers in Chapter 13 Bankruptcy Repayment Plan or veteran buyers who just recently gotten their Chapter 13 Bankruptcy discharged. There is no waiting period after the Chapter 13 Bankruptcy discharge date to qualify for VA Loans at Gustan Cho Associates. We are direct lenders with ZERO OVERLAYS on government and conventional loans.

We also offer TBD underwriting so veteran borrowers can be sure they qualify for VA loans before they start searching for a home!  Call us at Gustan Cho Associates at 800-900-8569 or text for a faster response to get started today. Or email us at gcho@gustancho.com.

FAQs: Colorado VA Lenders For Bad Credit With No Lender Overlays

• 1. Can I qualify for a VA loan with a low credit score with Colorado VA lenders? A low credit score will only qualify you for a VA loan with specific Colorado VA lenders. Even though the VA doesn’t establish a strict minimum credit score requirement, most lenders usually look for a score of approximately 620. Nevertheless, without additional requirements, certain Colorado VA lenders might give the green light to VA home loans for individuals with scores as low as 580 or even lower in specific situations.
• 2. Do all Colorado VA lenders have the same VA loan requirements? Not all Colorado VA lenders have the same VA loan requirements. Different lenders may have varying credit score requirements and overlays. A single lender could enforce a higher credit score requirement, whereas another might not impose any minimum credit score requirement. It’s crucial to locate a lender that aligns with your financial circumstances.
• 3. What is the lowest credit score I can have to get a VA loan in Colorado? VA home loans do not require a minimum credit score. Lenders in Colorado might consider approving loans for people with credit scores as low as 580. It’s important to find Colorado VA lenders that don’t have additional conditions to improve your chances of getting approved.
• 4. Does the VA allow borrowers with no credit score to qualify for a VA loan in Colorado? Yes, the VA allows borrowers with no credit score to qualify for VA home loans. Colorado VA lenders may use alternative credit data, such as rental history, utility, and insurance payments, to assess the borrower’s creditworthiness. Consistent, on-time payments in these areas can demonstrate financial responsibility.
• 5. How can I get approved for a VA loan with bad credit in Colorado? To increase your chances of getting approved for a VA home loan with bad credit in Colorado, focus on improving your credit score, finding VA lenders with lower credit scores, and providing compensating factors like stable income and a substantial down payment. Getting pre-approved will also show sellers that you are a serious buyer.
• 6. How long does a VA loan pre-approval take in Colorado? A VA loan pre-approval can take a few hours to a few days. To ensure a smooth pre-approval process, it’s important to provide all necessary documentation promptly and work closely with your lender.
• 7. Are there VA lenders in Colorado that do not require a down payment? Yes, VA home loans generally do not require a down payment. Colorado VA lenders can offer 100% financing with no mortgage insurance at competitive rates, making it easier for veterans to purchase homes without a significant upfront cost.
• 8. Why are many veteran homebuyers moving to Colorado? Many veterans are moving to Colorado due to the great economy, excellent job opportunities, low cost of living, affordable housing, low property taxes, and beautiful climate and landscape. Colorado also has a large population of active and retired military members, making it an attractive place for veterans to settle down.
• 9. What are the current VA home loan rates in Colorado? VA home loan rates in Colorado are competitive and often lower than conventional ones. Mortgage rates have been volatile, with rates generally over 5.0%. It’s advisable to consult with Colorado VA lenders for the most current rates and options.
• 10. How can I get VA loan approval after being denied by another lender? If you’ve been denied a VA loan by one lender, you can still qualify with another lender. Work with Colorado VA lenders with no overlays and understand the VA loan guidelines. They can help you navigate the process and find a solution tailored to your situation.

This blog about Colorado VA Lenders For Bad Credit With No Lender Overlays was updated on June 12th, 2024.