VA Guidelines Under 580 Credit Scores On VA Loans

This Article Is About VA Guidelines Under 580 Credit Scores On VA Loans:

VA loans have no minimum credit score requirements. The minimum credit score requirements are set by the individual mortgage lender. As long as the borrower can get an approve/eligible per automated underwriting system, the borrower is eligible. 

VA loans do not have a maximum debt to income ratio. It is possible to get an approve eligible per automated underwriting system with a 500 FICO and a 65 DTI as long as the borrower has an approve/eligible per AUS. Gustan Cho Associates has an aggressive investor on VA loans that will approve manual underwriting with lower credit scores and higher debt to income ratios as long as the borrower has strong residual income and compensating factors. We have approved manual underwriting VA loans with under 600 credit scores and over 60% debt to income ratios. In this article we will cover the following points:

  • VA loans with under 580 credit scores
  • Qualifying for VA loans with manual underwriting with lower credit scores and higher debt to income ratio
  • Getting approve on manual underwriting with late payments in the past 24 months

VA loans with bad credit and lower credit scores are more forgiving than FHA loans. We will explain why in this article.

Prequalify for a VA home loan now. 

Can The Borrower Qualify For A VA Loan With A Low Credit Score?

What are VA Guidelines Under 580 Credit Scores On VA Loans? The simple answer is the Department of Veterans Affairs has no minimum credit score requirements.

Then why are lenders asking for a 620 to 640 credit score minimum?

The main reason why lenders ask for a minimum credit score requirement is not that the Department of Veterans Affairs requires it but because they can have higher lending requirements called overlays Lender overlays are additional lending guidelines imposed by individual lenders that are above and beyond minimum VA Guidelines.

Agency Guidelines Versus Lender Overlays On VA Loans

All lenders require their borrowers to meet minimum VA Guidelines. However, lenders can have their own lending requirements called mortgage overlays.

This is the reason why a borrower may not qualify for VA Loans with a particular lender but may qualify with another lender.

Therefore, not all lenders have the same VA lending requirements. Gustan Cho Associates are lenders with no overlays on VA Loans.

We just follow VA Guidelines Under 580 Credit Scores which is no minimum credit scores are required.

VA Guidelines Under 580 Credit Scores allow borrowers to qualify for VA Loans with under 580 scores. However, borrowers will need to get an approve/eligible per automated underwriting system.

Automated Underwriting System On VA Loans

What is an automated risk assessment system

The automated underwriting system is an intricate sophisticated computer system that all mortgage borrowers need to go through. Loan officers will first collect mortgage documents. Docs include 1003 loan applications and credit reports. Once the loan officer submits all credit, asset, debts, and income information to the automated underwriting system, the AUS system will render an automated decision.

There are three readings the automated underwriting system will render:

  • Approve/Eligible
  • Refer/Eligible
  • Refer/With Caution

Approve/Eligible is what borrowers want. Approve/Eligible means that the borrower has an automated underwriting system approval and fully meets all VA Guidelines. Gustan Cho Associates Mortgage Group only goes by the approve/eligible per AUS. We do not have any additional guidelines on VA Loans.

So we have zero overlays on VA Home Loans. Refer/Eligible means that borrowers may qualify but the AUS cannot render an automated approval. However, borrowers may qualify for VA Loans via manual underwriting. Refer/With Caution means that the borrower does not meet VA Guidelines. Under VA Guidelines Under 580 Credit Scores, borrowers can qualify for VA Loans with 500 credit scores as long as they can get an AUS Approval.

VA Guidelines Under 580 Credit Scores And Key In Getting AUS Approval

Gustan Cho Associates has qualified, approved, and closed countless borrowers with under 580 credit scores.

The key to getting an approve/eligible per automated underwriting system on VA Loans with under 580 credit scores is to make sure borrowers have been timely on all of their payments for the past 12 months.

Borrowers can have bad credit, prior collections and charged-off accounts, and late payments.

However, the key is to have been timely on all of their payments in the past 12 months. 

Finding Lender That Honors VA Guidelines Under 580 Credit Scores With No Overlays

VA Guidelines Under 580 Credit Scores With No Overlays

Not too many lenders will approve borrowers with under 580 credit scores. Gustan Cho Associates is one of the very few national lenders that can approve borrowers with under 580 FICO.

To start the qualification process with credit scores under 580 FICO, please contact us at 262-716-8151 or text us for a faster response. Or email us at [email protected] Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

Get a custom VA mortgage quote now. 

Leave a comment