VA Loans With Low Credit Scores And High Debt To Income Ratio
This Article Is About VA Loans With Low Credit Scores And High Debt To Income Ratio
VA Loans is a special loan program that is only available to Veterans of the United States Armed Services with a valid COE. COE stands for Certificate of Eligibility. Only Veterans who have served in a branch of the U.S. Military with a honorable discharge are eligible for a VA COE. Our government rewards those men and women in uniform who have served our country with the opportunity to purchase a home with a VA Loan. There are no minimum credit score requirements on VA loans. VA loans does not have a maximum debt to income ratio cap as long as the borrower can get an approve/eligible per AUS.
In this article, we will discuss and cover qualifying for VA loans with high debt to income ratios as well as low credit scores.
Benefits Of VA Home Loans
Here are the benefits of VA Loans:
- No down payment is required on a home purchase with a VA Loan
- The veteran can purchase a home with 100% financing
- The VA Funding Fee can be rolled into the VA Loan
- VA allows 4% sellers concessions from the home sellers to the Veteran
- The veteran does not have to come up with any closing costs
- With the combination of no down payment required and closing costs covered by the home seller, the Veteran can close on his or her home purchase with zero money out of pocket
- No down payment required
- No closing costs required
- In the event, if the home sellers do not want to offer sellers concessions to lender can cover the closing costs with a lender credit in lieu of a higher mortgage interest rate
Again, no down payment required and the closing costs can be paid by the lender through a lender credit towards closing costs.
What Other Requirements Are Necessary To Qualify VA Loans With Low Credit Scores?
Just home buyers are Veterans of the United States Armed Forces with a Certificate of Eligibility does not automatically guarantee them a VA Loan. Do need good credit. Borrowers can also qualify for VA Loans With Low Credit Scores.
Here are other VA Mortgage Lending Requirements in qualify for VA Loans with low credit scores:
- Can qualify for VA Loans with low credit scores as low as 500 FICO
- VA does not have a minimum credit score requirement nor a maximum debt to income ratio cap
- Must be a Veteran of the United States Military with a valid COE, Certificate Of Eligibility
- Properties eligible are condos, townhomes, single-family homes, and one to four-unit properties
- Needs to be primary residence owner occupant properties
- Second homes, investment homes, and commercial properties are not eligible
- The borrower needs to have documented income
- Need to have timely payments in the past 12 months
- There is no debt to income ratio requirements
- Borrowers need to meet VA Guidelines
The borrower needs to get approve/eligible per Automated Underwriting System.
What Are The Credit Requirements For VA Loans?
Just because home buyers are veterans with a valid COE does not mean they automatically qualify for a VA Loan. Most VA lenders will have their own minimum credit score requirements for VA Loans due to their overlays. Lenders may also a debt to income ratio requirements even though VA does not have a maximum DTI Cap due to their own lender overlays. VA has one of the most lenient credit requirements out of all mortgage loan programs.
Gustan Cho Associates Mortgage Group is a national mortgage company with no overlays on VA Home Loans.
VA Mortgage Guidelines
Here are the basic VA Credit Requirements to get an approve/eligible per Automated Underwriting System on a VA Loan:
- VA does not have a minimum credit score requirement
- Credit scores are set by individual lenders and vary depending on their overlays
- Gustan Cho Associates does not have a minimum credit score requirement on VA Loans
- 580 credit scores are highly recommended but not necessary
- As long as borrowers get an automated approval and can satisfy all the conditions on the AUS, VA Loan should close
- 2 year waiting period after a Chapter 7 Bankruptcy waiting period
- 2 year waiting period after the date of a short sale to qualify
- 2 year waiting period after the recorded date of foreclosure to qualify
- 2 year waiting period after the recorded date of a deed in lieu of foreclosure to qualify for a VA Loan
- Outstanding collections and charge off accounts do not have to be paid to qualify
- There is no debt to income ratio cap to qualify for a VA Loan
- Debt to income ratio caps are VA Lender Overlays
- Deferred student loans that have been deferred for more than 12 months can be exempt from debt to income ratio calculations
Borrowers any questions on qualifying for VA Loan With Low Credit Scores or less than perfect credit, please contact Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected] Gustan Cho Associates has no Lender Overlays on VA Loans.