VA Loan With 500 Credit Score Guidelines

Gustan Cho Associates are mortgage brokers licensed in 48 states

Is it possible to qualify for a VA loan with 500 credit scores? The answer to this question is an absolute YES. The Veterans Administration (VA) is the federal agency that governs and sets guidelines on VA loans. The VA  does not mandate a minimum credit score requirement as long as the borrower can get an approve/eligible per the automated underwriting system (AUS). Over 20% of our VA loan borrowers at Gustan Cho Associates are folks with credit scores under 580 FICO.

How To Get AUS-Approval On VA Loans With 500 Credit Scores?

The AUS can render an approve/eligible per automated underwriting system as long as the borrower has been timely in the past 12 months on all of their debt payments reporting on the credit bureaus. Borrowers can qualify for a VA loan with 500 credit scores but need to understand one thing. You can have prior late payments, outstanding collections, and charged-off accounts but need to have re-established your credit and have been timely for at least the past 12 months.

VA Loan with 500 Credit Scores and Timely Payments In The Past 12 Months

People can have periods of bad credit due to unemployment, divorce, health reasons, or other extenuating circumstances. However, lenders want to see the borrower has re-established themselves and will not be delinquent with any of their payments going forward. The ability to repay will be scrutinized by the underwriter when underwriting the loan. Past payment history is the best indicator of future timely payments on the borrowers’ new mortgage loan.

VA Loan With 500 Credit Scores Mortgage Guidelines

In this paragraph, we will discuss and cover the minimum mortgage guidelines by the Veterans Administration. All lenders need to meet the minimum VA agency mortgage guidelines. The VA created very lenient mortgage requirements on VA loans to promote homeownership to our members of the U.S. Military who have earned their Certificate of Eligibility (COE). Data and statistics show retired and/or active-duty members of the U.S. Armed Services have lower credit profiles than their civilian counterparts. Part of this reason is due to deployment and/or base transfers. Due to the proven data on lower credit profiles by veterans, the VA has created lower credit guidelines to qualify for VA loans. However, lenders can set their own lending requirements called lender overlays.

Understanding the Difference Between The VA Guidelines Versus Lender Overlays By VA Lenders

Most lenders have lender overlays on VA  loans. Lender overlays are additional mortgage guidelines that are above and beyond the minimum VA agency guidelines. For example, the VA has no minimum credit score requirements on VA loans. However, most lenders will have minimum credit score requirements such as a 620 to 680 credit score. This holds true even though the VA does not require a minimum credit score requirement.

Not All VA Lenders Have the Same Credit Score Requirements on VA Loans

It is important to realize that not all VA lenders have the same credit score requirements. Just because you do not qualify for a VA loan with one lender does not mean another lender cannot approve you. Gustan Cho Associates is a five-star national mortgage company with no lender overlays on VA loans.

Getting Approved On VA Loan With 500 Credit Scores

All mortgage lenders need to make sure their borrowers meet the minimum agency mortgage guidelines of the VA on VA loans.

All mortgage lenders need to make sure their borrowers meet the minimum agency mortgage guidelines of the VA on VA loans. Lenders can have higher lending guidelines on top of the minimum VA agency guidelines called lender overlays. Gustan Cho Associates is one of the very few mortgage companies with no lender overlays on VA loans.

Minimum VA Mortgage Guidelines For VA Loan Approval

Below are the minimum VA Agency Mortgage Guidelines on VA loans:

  • 100% financing with no money down
  • There are no minimum credit score requirements on VA loans
  • This holds true as long as the borrower can get an approve/eligible per automated underwriting system (AUS)
  • Only primary owner-occupant properties are eligible
  • Second homes and investment properties are not eligible for VA financing
  • There is no maximum debt to income ratio caps on VA loans
  • Eligible applicants must be a veteran, active military, or spouse with an available certificate of eligibility
  • Outstanding collections and charged-off accounts do not have to be paid off
  • There is a two-year waiting period after Chapter 7 Bankruptcy, foreclosure, deed in lieu of foreclosure, short sale
  • Borrowers can qualify for a VA loan after one year into the repayment plan during the Chapter 13 Bankruptcy repayment plan with Trustee approval
  • Chapter 13 Bankruptcy does not have to be discharged
  • There are no waiting period requirements after the Chapter 13 Bankruptcy discharged date
  • If the Chapter 13 Bankruptcy discharge has not been seasoned for at least two years, the file needs to be a manual underwrite
  • There are no maximum loan limits on VA loans

Gustan Cho Associates are experts in helping borrowers qualify for a VA loan with 500 credit scores and bad credit. GCA Mortgage Group has no lender overlays on VA loans.

VA Lenders With No Overlays

Gustan Cho Associates are experts in helping borrowers qualify for VA loans with 500 FICO credit scores and prior bad credit. Not all mortgage companies have the same lending requirements on VA loans. Lenders need to meet the minimum agency mortgage guidelines set by the VA. However, each individual lender can have higher lending requirements that are above and beyond the minimum VA agency guidelines. The additional lending requirements by lenders are called lender overlays. Gustan Cho Associates is one of the very few mortgage companies with zero lender overlays on VA loans. As long as the borrower meets the minimum agency VA guidelines and can get an approve/eligible per the automated underwriting system, we can qualify, approve, and close the borrower. We have closed countless borrowers with credit scores under 600 FICO and higher debt-to-income ratios.

Homebuyers For VA Loan with 500 Credit Scores Need To Find What Overlays The Lender Has

Over 75% of our borrowers are folks who could not qualify at other lenders due to their lender overlays. Many people are under the impression that all lenders have the same VA lending requirements since VA loans are government loans. This is not true. A lender can impose any credit score requirement on VA loans even though the VA has no minimum credit score requirement. In this article, we will discuss and cover qualifying for VA loan with 500 credit scores and prior bad credit. Gustan Cho Associates has helped countless families purchase a home. We are experts in helping homebuyers with less than perfect credit and lower credit scores qualify for VA loans.

How Can I Qualify For VA Loans With 500 Credit Scores

Not all lenders have the same lending guidelines on VA loans.

Not all lenders have the same lending guidelines on VA loans. Lenders do have to have their borrowers meet the minimum agency mortgage guidelines of the VA. However, lenders can impose any higher lending requirements called lender overlays. For example, there are no minimum credit score requirements on VA loans. However, many borrowers have run into companies that require a 620 or 640 credit score requirement. Just because you do not qualify for a VA loan at one lender does not mean you cannot qualify for a VA loan at a different lender with no lender overlays.

VA Lenders Who Are Experts On  AUS And Manual Underwriting VA Loans With 500 Credit Scores Borrowers

Gustan Cho Associates has no lender overlays on VA loans. We can qualify and approve borrowers for VA loan with 500 credit scores as long as they can get an approve/eligible per the automated underwriting system. If the borrower cannot get an approve/eligible per AUS and gets a refer/eligible per AUS, we can still qualify the borrower via manual underwriting. Manual underwriting guidelines apply. The VA has created very lenient mortgage guidelines for veterans. There is no better mortgage loan than a VA loan. VA loans are only for active and/or retired eligible members of our United States Armed Services with a certificate of eligibility.

VA Credit Requirements During And After Chapter 13 Bankruptcy

The VA has created lenient agency mortgage guidelines on VA loans to promote homeownership for veterans. Statistics show members of the U.S. Military have lower credit profiles than their civilian counterparts due to many reasons. It is easy to overlook monthly payments for veterans who are on deployment. Military members often get transferred to other bases every few years. Due to statistics on the credit profile of military members, the VA has lightened up the credit and income guidelines on VA loans.

VA Agency Mortgage Guidelines on VA Loans

Here are the minimum agency mortgage guidelines on VA loans:

  • No minimum credit score requirement as long as the borrower can get an approve/eligible per automated underwriting system or qualifies for a manual underwriting
  • Manual underwriting is available for borrowers who get a refer/eligible per AUS and meet the manual underwriting guidelines
  • There is no maximum debt to income ratio cap on VA loans as long as the borrower can get an AUS approval
  • Borrowers with strong residual income and compensating factors should get an AUS approval
  • 100% financing
  • Up to a 4% seller concession from the home seller towards buyers closing costs
  • Eligible applicants must be a veteran, active military, or spouse with available home loan entitlement
  • Owner-occupant one to four-unit residential homes are eligible
  • No debt to income ratio cap with an approve/eligible per automated underwriting system and sufficient residual income
  • No maximum loan limit on VA loans
  • There is a waiting period of two years after Chapter 7 Bankruptcy, foreclosure, short-sale to qualify
  • Borrowers in an active Chapter 13 Bankruptcy repayment plan are eligible to qualify after being in the repayment plan for 12 months via manual underwriting
  • The Chapter 13 Bankruptcy does not have to be discharged
  • There is no waiting period after the Chapter 13 Bankruptcy discharged date

If the Chapter 13 Bankruptcy has not been discharged for at least two years, the file needs to be a manual underwrite.

VA Loans With Outstanding Collection Accounts

You can have prior bad credit such as outstanding collections, charged-off accounts, and late payments. Collections and charged-off accounts do not have to be paid to qualify for a VA loan. However, you need timely payments on all of your bills in the past 12 months to be eligible to qualify for a mortgage. The borrower’s credit scores will have an impact on getting the best mortgage rates. VA loans do not require annual mortgage insurance premiums like FHA loans. There is a VA Funding fee that is rolled into the balance of the loan. Mortgage rates on VA loans are very competitive. Rates are often lower than rates on conventional loans.

Qualify For VA Loan With 500 Credit Scores

Qualify For VA Loans With Credit Scores Down To 500 FICO

Gustan Cho Associates has no lender overlays on VA loans. The team at Gustan Cho Associates has helped countless borrowers qualify for VA loans with credit scores down to 500 FICO. We have zero lender overlays on VA loans. Not all lenders have the same VA mortgage guidelines. Most lenders will have lender overlays on VA loans. Just because you do not qualify for a VA loan with one lender does not mean you cannot qualify with a different lender. Gustan Cho Associates is a five-star mortgage company licensed in multiple states with no lender overlays on VA loans We are experts in helping borrowers with bad credit qualify for a VA loan with 500 credit scores. To qualify and get pre-approved, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected]tancho.com. The team at GCA Mortgage Group is available 7 days a week, evenings, weekends, and holidays.