VA Loan With Poor Credit And High DTI Mortgage Guidelines

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VA Loan With Poor Credit And High DTI Mortgage Guidelines

This ARTICLE On VA Loan With Poor Credit And High DTI Mortgage Guidelines Was Updated And PUBLISHED On October 3rd, 2019

VA Loan With Poor Credit

The answer is YES. Veterans can qualify for VA Loan with poor credit.

Here are VA Loan With Poor Credit Requirements:

What are VA Loan With Poor Credit Requirements

Veterans can qualify for VA Loans after filing Chapter 7 Bankruptcy as long as they meet a two year waiting period after the discharged date.

  • There is a two year waiting period to qualify for a VA Loan after the recorded date of foreclosure, deed in lieu of foreclosure and after a short sale
  • VA Loan With Poor Credit is much easier than FHA Loans With Poor Credit
  • VA requires on a two year waiting period after foreclosure, deed in lieu of foreclosure, short sale versus FHA requiring three years

In this article, we will cover and discuss VA Loan With Low Credit Scores and High DTI.

VA Loan With Low Credit Scores

What is VA Loan With Low Credit Scores

VA does not require a credit score. Minimum credit score requirement is set by lenders and not VA:

  • We like to see veterans to have credit scores of at least 580  
  • Veterans can still qualify for VA Loans with under 580 FICO
  • The only co-borrowers allowed with VA Loans are spouses of veterans
  • Non-occupant co-borrowers are not allowed like FHA Loans

VA allows for deferred student loans that has been deferred for long than 12 months to be exempt from debt to income ratio calculations.

Judgments And Tax Liens

What is this Judgments And Tax Liens

Borrowers can qualify for VA Loans with judgments and tax liens:

  • This holds true as long as they have written payment agreements
  • Consumers needs to have been paying on them for at least three months

Documents Required To Process VA Mortgage

What are Documents Required To Process VA Mortgage

Borrowers need to provide mortgage docs including:

History Veterans Administration And VA Loans

What is History Veterans Administration And VA Loans

In 1944 the VA Loan Program was created and launched to reward our Veterans who have served in the U.S. Military and come back from active duty overseas after World War II.

  • Most military personnel did not have the best of credit nor down payment to purchase a home after serving our country
  • So the VA Guarantee was created
  • This allowed veterans to qualify for a home purchase affordable
  • The Department of Veteran Affairs made sure that veterans qualified for VA Loan With Poor Credit

Most veterans had poor credit since they were serving in the military during World War II.

Objective Of VA Loans

What is Objective Of VA Loans

The major purpose of the creation of VA Loans was to give Veterans the chance of becoming homeowners:

  • This was accomplished with preference with regards to making Home Loans obtainable with less than credit required on other loan programs
  • No down payment, low or no closing costs, lower interest rates, and other hassles and stress non-veteran home buyers go through was the mission of the Department Of Veterans Affairs
  • For example, many lenders require a number of credit tradelines
  • Some even require a two year seasoning requirement on how long the borrower needs to have a particular credit tradeline
  • Most veterans who served overseas during wartime either had very limited or no credit
  • Large percentage of veterans had poor credit

Objective of VA Loans was for the government to find creative ways to help our veterans be able to purchase a home after completion of their military duty.

VA Loan With Poor Credit Requirement

What is VA Loan With Poor Credit Requirement

Veterans can qualify for VA Loan With Poor Credit:

  • However, veterans need to prove that they have re-established their payment patterns
  • Need to have been timely for the past 12 months

VA Agency Guidelines

What are VA Agency Guidelines

VA Loans is probably the best mortgage loan program available today:

  • But is only limited to veterans who have a certificate of eligibility
  • Borrowers can have prior poor credit and outstanding collections and charge off accounts
  • They do not have to pay them to qualify for VA Loans
  • VA is not a lender but a government entity that insures private lenders that originate and fund VA Loans  in the event if the veteran borrower defaults on their mortgage loan
  • The Government agency does have VA Residual Income Requirements
  • Veterans Affair does not have minimum credit score requirements or debt to income ratio requirements
  • Veteran borrowers can have an approve/eligible per Automated Underwriting System on a VA Loan with lower scores and 60% debt to income ratio
  • This holds true as long as they have sufficient disposable income, also referred to as Veterans Affair Residual Income Requirements

Credit score requirements and debt to income requirements on VA Loans is set by the individual lender.

Automated Underwriting System Approval

What is the Automated Underwriting System Approval

Gustan Cho Associates only cares about an approve/eligible per AUS FINDINGS on VA Loans. Most lenders with have overlays on VA Loans. To get an AUS automated findings approval, the automated system wants to see the following:

  • No minimum credit score requirements
  • 24 months of consistent employment history and stable income
  • No late payments in past 12 months
  • No late payments after bankruptcy or foreclosure
  • AUS may request VOR if borrower is applying for VA Loan With Poor Credit Score
  • No Overlays as long as borrower can get AUS approval 
  • Two year waiting period after bankruptcy, foreclosure, short sale
  • Deferred student loans that is longer than 12 months are exempt from DTI Calculations

Veterans can qualify for VA Loan one year into Chapter 13 and no waiting period after discharge date of Chapter 13.

VA Loan With Bad Credit

What is this VA Loan With Bad Credit?

Late payments in the past 12 months will not automatically trigger a denial per AUS. VA Loans is one of the most relaxed and easiest loan programs available. Veterans can qualify for VA Loan With Poor Credit and Bad Credit but the Veterans Administration want to see that the veteran borrower has recovered and re-established themselves and like to see timely payments in past 12 months.

  • No down payment requirement on VA Loans
  • 100% Loan To Value on cash out VA refinance mortgages
  • No annual mortgage insurance premium on VA Loans
  • VA does require a one time funding fee which can be added on to the balance of the VA Loan
  • VA allows up to 4% in sellers concessions from sellers to contribute for borrower’s closing costs

Contact Gustan Cho Associates at 262-716-8151 or text for faster response with any questions on VA Loan with Poor Credit Score and high debt to income ratios. Or email us at gcho@gustancho.com.

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