Qualifying For VA Loans With Low Credit Scores

This BLOG In Qualifying For VA Loans With Low Credit Scores Was Written By Gustan Cho

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 and only Veterans who have served in a branch of the U.S. Military and has a honorable discharge are eligible for a VA COE. Our government rewards those men and women in uniform who has served our country with the opportunity to purchase a home with a VA Loan. Here are the benefits of VA Loans:

  • No down payment is required on a home purchase with a VA Loan. A 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 so 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 does not want to offer sellers concessions to the Veteran home buyer, the mortgage 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 will be paid by the mortgage lender through a lender credit towards closing costs

What Other Requirements Are Necessary To Qualify VA Loans With Low Credit Scores?

Just because you are a Veteran of the United States Armed Forces with a Certificate of Eligibility does not automatically guarantee you a VA Loan.  You do need good credit but 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:

  • You can qualify for VA Loans with low credit scores as low as 580 FICO credit scores
  • Must be a Veteran of the United States Military with a valid COE, Certificate Of Eligibility 
  • Properties eligible are condos, town homes, single family homes, and one to four unit properties and needs to be primary residence owner occupant properties. Second homes, investment homes, and commercial properties are not eligible
  • Borrower needs to have documented income
  • Borrower needs to have good credit
  • Borrower needs to meet debt to income ratio requirements
  • Borrower needs to meet VA Guidelines
  • Borrower needs to get approve/eligible per Automated Underwriting System

What Are The Credit Requirements For VA Loans?

Just because you are a Veteran with a valid COE does not mean that you automatically qualify for a VA Loan.  Most VA Lenders will have their own minimum credit score requirements for VA Loans as well as their debt to income ratio requirements. VA has one of the most lenient credit requirements out of all mortgage loan programs. 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 and the credit scores are set by mortgage lenders
  • Our minimum credit score requirement is 580 FICO credit scores for a Veteran to qualify for a VA Loan and we have no lender overlays on VA Loans. As long as you get an automated approval and you meet the 580 FICO credit score requirement and can satisfy all the conditions on the AUS, your 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 for a VA Loan
  • 2 year waiting period after the recorded date of a foreclosure to qualify for a VA Loan
  • 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 for a VA Loan
  • 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 has been deferred for more than 12 months can be exempt from debt to income ratio calculations

If you have any questions on qualify for a VA Loan With Low Credit Scores or less than perfect credit, please contact Gustan Cho at 262-716-8151 or email us at gcho@gustancho.com. As long as you have a 580 FICO credit scores, we have no VA Lender Overlays on VA Loans.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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