VA Loans With 580 Credit Scores Mortgage Guidelines

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VA Loans With 580 Credit Scores Mortgage Guidelines

This BLOG On VA Loans With 580 Credit Scores Mortgage Guidelines Was UPDATED On October 11th, 2018

Many borrowers do not realize that they can get qualified for VA Loans With 580 Credit Scores. Actually, the U.S. Department of Veteran Affairs has no minimum credit score requirements on VA Loans. However, in order to get an approve/eligible per Automated Underwriting System Findings, a 580 credit score is highly recommended.

There are two types of VA Guidelines:

  • VA Guidelines
  • Lender Overlays

VA Agency Guidelines Versus Overlays

All VA Lenders need have their veteran borrowers meet VA Guidelines. Lenders Overlays are optional and it is up to the lender on the types of overlays they want to implement.

Here are example of VA Lender Overlays:

  • Overlays On Credit Scores
    • VA does not have a minimum credit score requirement
    • Many lenders require a 620 credit score although VA does not require any minimum credit scores
    • This is called VA Lender Overlays On Credit Scores
  • Overlays On Debt To Income Ratios
    • Most lenders require a cap on debt to income ratio on veteran borrowers
    • VA does not have a cap on debt to income ratios
  • Overlays On Collections And Charge Offs
    • Many lenders require that charged off and collection accounts to be paid off
    • Veteran borrowers can qualify for VA Home Loans with outstanding charged offs and collections without having to pay them off
    • This is called overlays on collections and charged off accounts on VA Loans

The Gustan Cho Team at Loan Cabin Inc. has no mortgage overlays on VA Home Loans. We just go off VA Guidelines and Overlays do not exist.

VA Mortgage Process

Often many borrowers who are Veterans with a Certificate of Eligibility are told by lenders that they cannot qualify for a VA Loan without have a credit score of at least 620:

  • Other lenders turn Veterans down because they tell them that VA has minimum credit scores of 640
  • Veterans with a valid COE can qualify for VA Loans With 580 Credit Scores
  • This is not the case
  • The United States Department of Veteran Affairs, VA, has one of the most lenient mortgage guidelines out of all mortgage programs in the Country
  • VA realizes that Veterans often do not have the best of credit, especially due to transfers that can happen several times per calendar year as well as deployment
  • During wartime, it is often difficult to worry about paying their minimum monthly debts overseas and injuries are often common while serving in the United States Military

About The Department Of Veterans Affairs

The United States Department Of Veterans Affairs is not a mortgage lender and does not originate, fund, or services VA Loans.

  • The Veterans Administration insures residential home loans that private mortgage lenders makes to United States Veterans who meet the VA Guidelines
  • In the event if the Veteran borrower were to default on his or her VA Loan, the Veterans Administration will insure that mortgage lender against the defaulted and/or foreclosed VA Loan
  • This VA guaranty makes it extremely desirable for private lenders to fund VA Loans due to little to no risk due to the insurance and guarantee by the federal government against losses on VA Loans

How Much Do I Need To Qualify For VA Loans With 580 Credit Scores

One of the greatest benefits our government gives our Veterans for serving our country and has received an honorable discharge is a Certificate of Eligibility to qualify for VA Loans.

Here are the benefits of VA Loans:

  • No down payment required for VA Loans
  • There is a VA Funding Fee
  • The VA Funding Fee can be rolled into the VA Loan
  • There is no need for money out of pocket by the Veteran for down payment
  •  VA Loan Limits for no money down is normally $453,100
  • However, VA does not have a maximum loan limit as long as the Veteran can come up with 25% of the VA guarantee if the Veteran goes beyond the $453,100 ceiling
  • There are closing costs on all home purchases and refinances
  • However, on purchases, VA allows the home seller to give the home buyer up to a 4.0% sellers concession towards the home buyer’s closing costs
  • If the veteran home buyer is short on closing costs or if the home seller is not willing to give a sellers concession, the Veteran can get a lender’s credit to cover part or all of the closing costs
  • There is no mortgage insurance premium on VA Loans
  • Bottom line is that a Veteran with a COE does not need a penny to purchase a home with a VA Loan

VA Credit Requirements To Qualify For VA Loans With 580 Credit Scores

Qualifying for VA Loans with 580 Credit Scores is no problem at all. VA credit requirements are extremely lenient.

  • However, Mortgage Lenders are not expected to abide to the minimum VA Credit Guidelines
  • Lenders do have to meet the minimum VA Lending Guidelines
  • However, they can set higher standards of their own which is called Lender Overlays
  • Most Mortgage Lenders will set a minimum credit score requirement of at least a 620 Credit Score or higher
  • There are lenders like Gustan Cho Associates at Loan Cabin Inc. that will approve Veterans for VA Loans with 580 credit scores and sometimes lower

Here are VA Credit Requirements:

  • VA does not have a mandatory minimum credit score requirement
  • VA lets the lender to set the minimum credit score requirement
  • Most lenders who are approved with the VA to originate and close on VA Loans have Lender Overlays on Credit Scores on VA Loans
  • Lender Overlays are the individual lender’s requirement which is above and beyond of those of the Department of Veteran Affairs
  • Most lenders will set lender overlays on credit scores at 620 to 640
  • The Gustan Cho Team at Loan Cabin Inc. has no lender overlays on VA Loans
  • VA does not have a maximum debt to income ratio requirement
  • I recently got an approve/eligible per Automated Underwriting Approval Findings on a borrower with a 582 credit score and a 58% debt to income ratio

Qualifying For VA Home Loans After Bankruptcy And Housing Event

There are waiting period after bankruptcy and/or housing event to qualify for VA Home Loans:

  • 2 year waiting period to qualify for a VA mortgage loan after a Chapter 7 Bankruptcy
  • 2 year waiting period after housing event:
    • Date of prior short sale date
    • Recorded dates of foreclosure and/or deed in lieu of foreclosure
  • If you have deferred student loans that are deferred for at least 12 or more months, it will be exempt from from debt to income ratio calculations

Again, VA Loans are one of the most easiest mortgage loan programs to qualify for. However, not all can qualify for VA Loans. Only the men and women who have served in the United States Armed Services with a valid Certificate of Eligibility can qualify for this great loan program.

Lender That Specializes In VA Loans With 580 Credit Scores With No VA Lender Overlays

I get countless of calls by Veterans who shop for VA Loans and are told that they qualify for FHA Loans but not VA Loans with 580 Credit Scores. Again, this is not the requirements of the Veterans Administration BUT because the lender they went to have lender overlays. There is no reason why a Veteran who can qualify for a FHA Loan cannot qualify for a VA Loan

  • Veteran Borrowers were told NO on a VA Loan BUT Yes on a FHA Loan, please contact us at The Gustan Cho Team at Loan Cabin Inc.
  • As long as borrowers can get an approve/eligible per Automated Underwriting System and can clear the conditions on the AUS, we will close on VA Loan with with no lender overlays
  • We have a national reputation on closing VA Loans in 21 days from the date eDisclosures are signed on VA Loans

Veteran Borrowers need to consult with a national VA direct mortgage lender that specializes in VA Loans with with no lender overlays, contact The Gustan Cho Team at Loan Cabin at the contact information below:

Gustan Cho NMLS 873293

Email: gcho@loancabin.com

Direct: 1-262-878-1965

Cell: 262-716-8151 Please Text For Faster Response With Contact Information Including Email Address

Available 7 days a week, evenings, weekends, and holidays

  1. Gustan Cho, NMLS 873293 says

    Where do I begin about to tell you my experience with Gustan Cho of CrossCountry Mortgage???? Gustan Cho of The Gustan Cho Team at Gustan Cho Associates is an AMAZING talented and creative mortgage expert and professional and human being!!! He has been able to do what other so called mortgage lending “professionals” are too lazy or unknowledgeable to do. At first like many others I was skeptical of the 80+ reviews I read and the phenomenal national reputation Gustan Cho and The Gustan Cho Team at Gustan Cho Associates has all over the internet. But I did my due diligence and took a chance and sent him a message. Low and behold just like everyone said he contacted me immediately. Â We spoke for over an hour! At my most desperate hour he was a pilar of strength! When I first spoke to him I was literally in tears and he had me laughing before we hung up the phone! He is extremely knowledgeable and hard working. We had a very unique financial situation and couldn’t get the proper help. But Gus was confident, quick and reliable. He always called, text or emailed us promptly. He had an outstanding team of professionals that are available nearly 24/7! Â And I swear he doesn’t sleep! Do yourself a favor and go to google and read all his amazing reviews! I did and now I too can confirm they are all spot on! Of course NOBODY can have 100% perfect reviews because you can never please everyone all the time. There is always someone who will never be happy even if you bend over backwards. But Gus’ motto is “where there is a will there is a way”! And if there is any glimmer of hope within reason this man will help you! I will always be eternally grateful for his help and support! I told him he is a “miracle worker”! Â He is an “angel from heaven”! God Bless Gus!

  2. Gustan Cho, NMLS 873293 says

    The Gustan Cho Team at USA MORTGAGE a Division of DAS ACQUISITION COMPANY NMLS 227262A has no overlays on government and conventional loans. There are no credit score and maximum debt to income ratio requirements with VA LOANS at The Gustan Cho Team at USA MORTGAGE.

    Gustan Cho NMLS 873293

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