Qualifying For VA Loans With Bad Credit
This BLOG On Can I Qualify For VA Loans With Bad Credit Was Written By Gustan Cho
Veteran home buyers with a Certificate Of Eligibility can now qualify for VA Loans With Bad Credit. VA Loans are hands down the easiest and best home loan program in this country. Many borrowers who contact me say that their mortgage lender can approve them for FHA Loans but not for a VA Loan. Why is that? Here are the reasons why other lenders cannot qualify them with VA Loans with Bad Credit but can qualify them for FHA Loans With Bad Credit:
- The United States Department of Veteran Affairs, or VA, does not have minimum credit score nor debt to income ratio requirements
- Most mortgage lenders will have VA Lender Overlays that are higher than FHA Lender Overlays
- Most Lenders will have a 640 FICO Credit Score Requirement and they may have a 620 FICO Credit Score Requirement
- The national mortgage lender The Gustan Cho Team represents only requires a 580 FICO Credit Score and has ZERO VA LENDER OVERLAYS
- You can definitely qualify for VA Loans With Bad Credit
- VA Loans are much easier to qualify than any other loan program
- VA Loans are the BEST mortgage loan program in the nation HOWEVER, only Veterans of the United States Military with a COE, CERTIFICATE OF ELIGIBILITY, can qualify for VA Loans
Just because you are a Veteran of the United States Armed Forces with a COE, you still need to qualify for a VA Loan.
VA Loans Explained
VA Loans are home loans that are originated through private mortgage companies and banks.
Here is how VA Loans work:
- The United States Department of Veteran Affairs is VA
- VA is not a lender but oversees the VA mortgage process
- VA’s role is to insure VA Loans that are originated and funded by private mortgage lenders and banks who are VA approved
- The way VA insurance works is any VA Loans that are originated by VA Lenders that default and goes into foreclosure, VA will guarantee and insure the mortgage lender that has originated and funded the VA Loans against losses
- The VA Loan Guarantee by the Department of Veterans affairs allows private mortgage lenders to keep on originating VA Loans with no money down and very low mortgage interest rates due to little risk due to the guarantee by VA
- VA Loans is the easiest mortgage loan program to qualify for and qualifying for VA Loans with bad credit is one of the specialties of The Gustan Cho Team
- The United States Department of Veterans Affairs is aware and fully takes into considerations that Veterans often can have bad credit and low credit scores due to being deployed while serving in the United States Armed Services
- There are countless of factors where Veterans can have lower credit scores and bad credit and due to these circumstances, VA understands when Veterans apply for a home loan and created very lenient credit and income guidelines when Veterans are applying for VA Loans with bad credit
Borrower Requirements For VA Loans With Bad Credit
VA Loans are the best mortgage programs with very easy borrower qualification requirements. VA Loans offer one of the lowest mortgage interest rates out of any mortgage loan programs. Here are general borrower requirements for VA Loans:
- VA Loans do not require any down payment. 100% down payment on VA Loans. Not everyone can qualify for VA Loans. Only Veterans with a Certificate of Eligibility are eligible for VA Loans
- VA Loans are for owner occupant properties only
- One to four unit properties are eligible for VA Loans
- The national mortgage lender that The Gustan Cho Team represents has no lender overlays on VA Loans. The only requirement is a 580 FICO Credit Score. As long as you get an approve/eligible per Automated Underwriting Approval, The Gustan Cho Team will close on your VA Loan
- There is no debt to income ratio requirements on VA Loans
Why Are VA Loans So Much Easier Versus FHA Loans?
The United States of Veteran Affairs realize that most veterans have lower credit and/or bad credit than the civilian public due to the following reasons:
- Our government view that most veterans do not have had credit established than the civilian public because of their constant transfers and/or deployment while serving in the Armed Service. Due to this reason, they either have no credit, little credit, or bad credit thus many veterans have little to no credit tradelines
- Most Veterans of the Armed Services do not take on student loans because in the event that they do, the military pays for the student loans such as the ROTC college programs and those who are enrolled at any one of the United States Military, Naval, Air Force Academies have government paid tuition and board
- Most Veterans do not have established credit because most Veterans do not have automobile loans or other credit.
- When a Veteran is deployed overseas, the Veteran often has difficulty in making timely payment on his or her debt back home.
- If the Veteran is deployed overseas and during wartime, missing a few months in payments on his or her bills can easily plummet the Veteran’s credit scores. The United States Department of Veteran Affairs understands this and that is why qualifying for VA Loans with bad credit is easy
Shopping For VA Loans With Bad Credit
Many Veterans will have less than perfect credit after retiring from the military and VA fully understands that. The U.S. VA Guaranty program already accounted for this fact that it is very probable for Veterans to have lower credit scores or bad credit. VA also has much lenient credit guidelines than FHA Loans.
Here Are VA Credit Guidelines Versus FHA Credit Guidelines:
- Waiting period is two years after a Chapter 7 Bankruptcy discharged date to qualify for a VA Loan. It is the same waiting period to qualify for a FHA Loan
- Waiting period to qualify for a VA Loan after a short sale, foreclosure, deed in lieu of foreclosure is two years. For FHA, the waiting period three years to qualify for a FHA Loan after a short sale, foreclosure, deed in lieu of foreclosure
- Students Loans that have been deferred for 12 or more months are exempt from debt to income calculations with VA Loans. FHA does not exempt deferred student loans from debt to income ratio calculations
As you can see, VA credit guidelines are much more lenient than FHA Guidelines.
Why Am I Told I Do Not Qualify For VA Loan But Qualify For FHA Loans?
There is not a day that goes by that I do not get a call from a Veteran who are told that they do not qualify for a VA Loan unless they have at least a 620 or 640 credit score or that they do not qualify for a VA Loan because their debt to income ratios are higher than 41% DTI. These lenders tell our heroes misinformation and blatantly lie to them. These Veteran home buyers may not qualify for a VA Loan with them BUT they do qualify for a VA Loan with a VA Lender with no lender overlays. VA does not have a debt to income ratio requirement and do not have a credit score requirement. If you are told that you do not qualify for a VA Loan due to not having credit scores over 620, please contact Gustan Cho at the following contact:
Gustan Cho NMLS 873293
Cell: 262-716-8151 Please Text For Faster Response With Contact Information Including Email Address
Available 7 days a week, evenings, weekends, and holidays to take calls from 50 states