VA Loan With Bad Credit And Low Scores On Home Purchase
This BLOG On VA Loan With Bad Credit And Low Scores On Home Purchase Was UPDATED And PUBLISHED On February 10th, 2020
One of the greatest benefits a Veteran of the United States Armed Services can get by serving our country is to be eligible for a VA Loan.
- The VA Loan Program was launched back in 1944 to reward our Veterans for their service
- Many Veterans returning from the second World Ward benefited from the newly created VA Loans
- It made home ownership affordable and very easy
- It meant that Veterans can Qualify For VA Loan With Bad Credit or less than perfect credit
In this article, we will discuss and cover qualifying for a VA mortgage with bad credit and lower credit scores.
Bad Credit VA Mortgage Guidelines
One of the factors that really went in creating the VA Loan Program was to streamline the complexities for Veterans applying for a VA Loan with bad credit by the following:
- Being able for the veteran to qualify for VA Loan with bad credit or less than perfect credit
- Reduce hassles of getting a mortgage loan
- Making the home buying process affordable by requiring no down payment
- Allowing sellers concessions for Veteran home buyers of up to 4%
- This is so home buyers do not have to come up with any closing costs out of pocket
- If home sellers will not give sellers concessions, Lender can offer lender credit in lieu of higher mortgage rate
VA Funding Fee can be rolled into Loan so no money out of pocket.
No Money Out Of Pocket On Home Purchase
A Veteran with a VA Loan can purchase a home with their VA Loan with zero down payment and zero closing cost and no money out of pocket:
- The government made a point that Veterans can qualify for VA Loan with bad credit
- This is because most military personnel who served our country oversees lacked credit
- Especially established good credit
- Many Veterans did not have any money saved for a down payment on a home purchase
To honor our men and women in uniform, the United States government created the VA Loan Program as a way of rewarding and thanking our Veterans after the completion of their service in helping them become homeowners with a VA Loan.
How Do VA Loans Work?
VA Loans are only limited to Veterans who have an honorable discharge with an active Certificate of Eligibility or COE.
Here are the basics on VA Loans:
- No money down
- 100% financing
- Up to 4% sellers concessions
- VA Loan Limits is normally between $417,000 to more than $625,000. The VA Loan Limits depends on the county the property is located
- The United States Department of Veteran Affairs, or VA, is not a mortgage lender and does not originate, fund, or service VA Loans
- The Department of Veteran Affairs guarantees VA Loans to lenders
Guarantees all VA Loans will be paid and insured if homeowner defaults on his or her Loan and goes into foreclosure.
How To Qualify For VA Loan With Bad Credit?
Borrowers with a Certificate of Eligibility can qualify for VA Loan With Bad Credit. In general, VA Lenders want to see the following:
- Veterans can qualify for VA Loan with Bad Credit but VA Lenders do want to see the timely payment in the past 12 months
- Periods of bad credit is fine, but lenders want to see re-established credit
- VA Lenders want to see stable income and good signs of anticipated income for the next three years
- Lenders want to see the Veteran will be able to pay their new VA Loan timely
- Also, borrowers will be able to pay all of their other monthly income comfortable
- Lenders want to see enough disposable income by borrowers to be able to meet the VA requirements and standards for the cost of living
- Stable income under the eyes of the VA is considered 2 years of the same employment and continuation of employment for the next three years
- Gustan Cho Associates has no credit score requirements on VA Loans
- Gustan Cho Associates has no debt to income ratio requirements on VA Loans
- However, many lenders require a higher credit score
- VA does not have a credit score minimum
- It is the VA Lender that requires and sets the credit scores
- This is called a VA Lender Overlay
Borrowers can qualify for VA Loans with a 60% debt to income ratio. Sometimes, you can get an approve/eligible with a higher debt to income ratio than 60% with strong residual income. Contact us at Gustan Cho Associates at 262-716-8151 or text for a faster response. Or email us at firstname.lastname@example.org if you have high debt to income ratio and are needing to qualify for a VA Loan with a direct lender with no overlays.
VA Mortgage After Bankruptcy And A Housing Event
Borrowers can qualify for a VA Loan 2 years after a Chapter 7 Bankruptcy discharged date:
- No late payments after Bankruptcy discharged date
- Borrowers can qualify for a VA Loan one year into a Chapter 13 Bankruptcy repayment plan
- Borrowers can also qualify for a VA Loan right after a Chapter 13 Bankruptcy discharged date with no waiting period
- There is a two-year waiting period to qualify for a VA Loan after a recorded date of a foreclosure or deed in lieu of foreclosure
- There is a two-year waiting period to qualify for a VA Loan after the short sale date which is reflected in the settlement statement of the short sale
- Deferred student loans that have been deferred more than 12 months are exempt from debt to income ratio calculations
- Outstanding collection accounts and charge off accounts do not have to be paid to qualify for VA Loan
Borrowers who need to Qualify for VA Loan with bad credit and low credit scores can contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at email@example.com. We have no lender overlays on VA Loans. We are available 7 days a week, evenings, weekends, and holidays.