Qualifying for a VA Loan With Bad Credit score is possible. To qualify, you need a FICO credit score of about 620. VA does not demand a minimum credit score although the required credit score varied depending on the lender. A credit score of below 620 is often considered as a “bad Credit.”
What is a VA Home Loan?
This is a type of mortgage that is offered to qualifying veterans, military families and service members within the USA. Most VA loans are provided by private lenders, but the Department of Veteran Affairs (VA) guarantees a portion of the loan. The intervention of the department of veteran affairs makes it possible for private lenders to offer better terms for VA borrowers.
How to Access a VA Loan With Bad Credit
To qualify for a VA loan, you need to meet some requirements which are relatively easy to attain.
- You must have no outstanding collections
- Void of outstanding judgments
- You must have a stable income
- Preferably a credit score of 620 or higher
The VA program was founded after the second world war in the year 1944. This program was meant to provide people who served in the war a chance to easy access to safe and affordable funding of the home loan. The whole program makes it easy for individuals with a less than perfect credit score to access home loans. This program helps cut out the bother of paying a down-payment, closing costs and the need for good credit.
Is There A Limit To How Much One Can Borrow?
The VA does not place a limit on how much an individual can borrow. However, there is a limit to how much you can borrow without having to pay a down-payment. The limit on how much you can borrow without a down-payment varies from depending on the lender. The restrictions also vary depending on the county where you intend to buy a home, and the amount of the loan the VA intends to guarantee. If you intend to borrow an amount that exceeds the set limits in your county of interest, then you will have to pay a down-payment of at least 25 percent of the amount that exceeds the set limits.
Over the years, the amount of money that a person can borrow has increased significantly. The VA has also made it possible for individuals in active duty to apply for and get a VA home loan. The loan amount limits that a qualified individual may borrow with a no-down-payment varies between $400,00 and $625, 000 depending on your county of interest. The VA loan assures lenders that the loan will be paid back and at the same time it helps veterans find a home with ease.
The two main factors that determine the credibility needed to obtain a VA loan are proof of satisfactory payment history and the availability of a present or anticipated income. Your income should support your needs such as bills and be able to cover your VA loan installments on a monthly basis. At least 24 months of consistent employment is considered a stable income. Anything short of that prompts the underwriter to assess the probability of your future employment.
You can get a VA Loan With Bad Credit if you fall into the category of individuals without a credit score and others with a credit score of below 620. Qualification for a VA loan for individuals without a credit score is determined by your rent payment history, car insurance premiums payments, and other consistent monthly payments.
If you have unpaid debts, late payments and such then your creditworthiness may be deemed unsatisfactory. The good news is that late payments may not automatically cause you to not qualify for VA mortgage loans. If you are in a special circumstance, you may still be considered eligible for the VA Loan With Bad Credit. The important thing is that you have to have a viable payment plan in place. If you are in a Consumer Credit Counseling or bankruptcy (Chapter 13) you will still be ably considered for a VA loan provided you are currently making regular payments on schedule.
Having filed for bankruptcy will not affect your eligibility provided that you filed for bankruptcy because of the fall of a self-employed venture after which you were able to secure a job, or due to a circumstance that is beyond your control such as an illness that was not covered by your medical insurance.
You should have an acceptable credit image. For example, too many new inquiries may seem like new credit lines. The underwriter will think that you have stretched too thin, and you may fail to meet your VA mortgage monthly payments and deny you a loan based on that finding. If not, the new inquiries may delay your loan’s approval.