VA Loans With Low Credit Scores And Bad Credit Mortgage Guidelines

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This ARTICLE On VA Loans With Low Credit Scores And Bad Credit Mortgage Guidelines Was PUBLISHED On July 29th, 2020

The team at Gustan Cho Associates are experts in helping borrowers with VA Loans With Low Credit Scores And Bad Credit.

  • VA loans are the best loan program in the Nation
  • Due to the government guarantee from the Veterans Administration, lenders can offer VA loans to eligible active-duty and/or retired members of the U.S. Armed Services with a certificate of eligibility (COE) with no down payment, 100% financing, and competitive mortgage rates
  • There is no minimum credit score requirement or maximum debt to income ratio caps on VA loans
  • The VA has no maximum loan limit on VA loans
  • There is no mortgage insurance requirement on VA loans
  • Gustan Cho Associates is one of the very few national mortgage companies with no lender overlays on VA loans

In this article, we will discuss and cover VA Loans With Low Credit Scores And Bad Credit Mortgage Guidelines.

Qualifying For VA Loans With Low Credit Scores And Bad Credit

Gustan Cho Associates get countless calls daily from borrowers who were told conflicting credit score requirements by lenders.

  • Some borrowers were told the minimum credit score requirements were 660 FICO by one lender and 640 by another lender
  • Some borrowers are told you cannot qualify for VA loans unless you have a 680 credit score
  • The thing lenders are not telling loan applicants is that the VA does not have a minimum credit score requirement
  • Many borrowers who meet the minimum VA Agency Mortgage Guidelines are shooed away by lenders who have lender overlays
  • These borrowers who may meet the minimum VA Agency Guidelines are told they do not qualify for VA loans
  • The fact of the matter is these borrowers may not qualify with the particular lender due to lender overlays
  • However, these borrowers who are told they do not qualify with this particular lender may meet all VA Agency Guidelines
  • These borrowers qualify for a VA loan with a lender with no lender overlays on VA loans

Gustan Cho Associates is a five-star national mortgage company with no lender overlays on VA loans. We do not have any lender overlays on government and/or conventional loans. In the next paragraph, we will discuss the minimum agency VA guidelines on VA loans.

Understanding VA Agency Guidelines Versus Lender Overlays

All lenders will require their borrowers to meet the minimum VA Agency Guidelines.

  • However, lenders can have their own lending requirements that are above and beyond the VA Agency Guidelines called lender overlays
  • It is totally legal for a lender to impose lender overlays on just about anything
  • For example, there is no minimum credit score requirement to qualify for a VA loan
  • However, most lenders will require a minimum credit score requirement such as a 680, 660, 640, or 620 credit score
  • There is no debt to income ratio caps on VA loans
  • Again, lenders can impose a maximum DTI cap on VA loans
  • This holds true even though the VA does not have a maximum DTI requirement
  • Therefore, loan officers who get an approve/eligible per automated underwriting system findings on a borrower, the loan officer needs to manually double-check and qualify the borrower to see if the borrower meets the lender’s overlays

Gustan Cho Associates has no lender overlays on VA loans. GCA Mortgage Group is one of the very few lenders that have no lender overlays on VA loans.

VA Loans With Low Credit Scores And Bad Credit Mortgage Guidelines: Minimum VA Agency Guidelines

Below are the VA Agency Mortgage Guidelines. Borrowers who meet the following guidelines can get approved and close on a VA loan. If you meet the following guidelines and are told by a lender that you do not qualify for a VA loan, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com. GCA Mortgage Group is one of the very few lenders that have no lender overlays on VA loans.

  • Only active and/or retired members of the U.S. Military with a valid certificate of eligibility (COE) qualify for VA loans
  • Or qualifying spouses of eligible veterans
  • There is a two year waiting period after Chapter 7 Bankruptcy, foreclosure, deed in lieu of foreclosure, short sale to qualify for VA loans
  • VA loans can be manually underwritten
  • Manual Guidelines Apply
  • Borrowers in an active Chapter 13 Bankruptcy repayment plan can qualify for a VA loan during the repayment plan without the Chapter 13 Bankruptcy being discharged with Trustee approval
  • However, it needs to be manually underwritten
  • There is no waiting period to qualify for a VA loan after Chapter 13 Bankruptcy discharged date
  • Any Chapter 13 Bankruptcy discharge that has not been seasoned for at least two year needs to be manually underwritten
  • Manual underwritten guidelines apply
  • The VA allows 100% financing with no down payment required
  • Most borrowers do not have to worry about closing costs on VA loans
  • Closing costs are normally covered with a seller’s concession and/or lender credit
  • Outstanding collections and charged-off accounts do not have to be paid off to qualify for VA loans
  • Only spouses of the main borrower can become a co-borrower on VA loans
  • Deferred student loans of 12 months or longer are exempt from debt to income ratio calculations

As long as you meet the above minimum Agency Guidelines, you will get approved for a VA loan. If a lender tells you that you don’t but you meet the above guidelines, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com. The team at GCA Mortgage Group is available 7 days a week, evenings, weekends, and holidays.

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