One very frequent question has to do with bad credit and VA loan qualifying. Though VA guidelines state no credit score minimum for qualifying for a VA loan, a potential VA borrower with bad credit or even a bankruptcy can be turned down.
VA-approved lenders consider debt-to-income ratios, residual incomes and loan histories, as well as complete credit histories and FICO scores, to determine whether an applicant is a satisfactory credit risk.
Bad credit may require some repair before a VA loan can be approved. Sometimes this is a matter of paying off a few credit cards. Other times it can mean waiting the two years required for the black cloud of bankruptcy to blow over.
Applicants from VA borrowers with bad credit or bankruptcy histories are considered for VA-backed loans on a case-by-case basis.
VA-eligible borrowers who need more information about qualifying for military mortgages with bad credit should contact an experienced loan professional.
Unfortunately my wife and I had to foreclose on our home in the summer of 2009. My FICO prior to that was very good (two over 800 and the third high 790s). We are now interested and financially stable to where we want to buy using our VA Home Loan option. Does anyone know (not a guess please) if there is stipulations timewise that prevent this loan post-foreclosure?
Allen we bought a home in colorado and had to do a short sale. You should be good since it's over two year. We bought a home 2 years after that and we didn't know that we could have used our VA loan, until I called them. Also we owed 13,000 and we can still use our VA loan, but the next home we buy has to be a litte high in price than the home we short sold, if now then VA would cover the home, but subtract the $13,000. That's what I was told.
My wife and I recently moved into a home that we were/are allowed to rent with the option to purchase. My/our credit scores were middle of the road at that time, six and a half months ago, but as soon as we moved in, all sorts of bad credit started appearing on my report, some of my own and some not. Now I'm unable to use my VA loan to purchase this home that we are certainly interested in buying. My intentions were never to live in this home paying as much rent as we are paying. I need an experience VA loan expert to please help us purchase our first home, period!!
b. allen, Minimum of 2 years after the bankruptcy discharge per VA. Did you include a house that was bought with at VA loan, as this can impede you getting a VA loan but talk to a home loan specialist if you have. Since the bankruptcy DISCHARGE do you have any credit issues, 30 days late on credit cards or other loans, anything in collections? Best is to take yourself to a qualified VA home loan officer at your bank and see what they say. If it's a minor issue you can always try another bank.
Here's a link to a good article on Foreclosures and VA Loans http://www.directvaloans.com/VA_Home_Loan_Guide/A…
Also what they don’t tell you is if you have a credit score of 640 or better but have made a 60 day late mortgage payment. You qualify for the va loan but because your late is with a mortgage, even if it was more than 12 months, you won’t clear underwriting. I am living that nightmare right now. I meet the requirements but because my late was a mortgage they can’t even tell me when it will be acceptable to come back. I even had pre approval with pnc and then was shoved aside once it went to automated underwriting.
Edward, In order to qualify for a loan, you must be current on your mortgage for a minimum of 12 months. If you are late (30 days past the due date) you will be unable to obtain a loan until a full year has passed since your last late payment. Remember: missing the exact due date and being past due are two very different things. If a loan officer asks you if you have been late on a payment, only say “yes” if it has been 30 days late. I'm sorry you are having challenges getting the loan now, but if you stay current for the next year and all other factors to qualify for a VA mortgage are in place, you should have a positive outcome. Best of luck.
Well last time I was late was August 2011 on my mortgage. I addressed that with the lender and we pushed my settlement out to sept 30. This way I would have a clear 12 months of no lates. Still was pushed back from underwriting. Nogo for me.
I had a VA loan 27 years ago, the home was foreclosed on. I recently got a letter from the VA stating I have to repay over $12,000 for that loan. Is this correct?
My md credit score is 560 will that be high enough for a VA home loan, I am a disabled veteran, my wife's mid score is 590
Jason, First of all, thank you for your service and I apologize for the delay in response to your post. Most lenders look for a combined credit score of 620 or higher. So while credit isn't the only element that VA lenders use to determine if you qualify, you'll need to do some work to get your score up closer to that # in order to be considered for a VA home loan. Here's a good article on ways to fix your credit http://www.myfico.com/crediteducation/improveyour… . Good luck.
I am having the same problem. I am a disabled vet 100% service connected. I filed bankruptcy and it is past the 3 year mark. But I do have a late payment with walmart and they are refusing to remove it, even after I paid my balance down to 17$. I am seeing my dream slip right thru my fingers and am becoming so distraught. If anyone has any idea's please let me know. Thank you, Sandy
This is a common problem that no one has addresses. I am a 100% disabled veteran. Most of the gurus in the industry don't realize that while I am waiting the 2 years or so for the VA to decide if I am eligible for benefits, I can't work, I have bills just like every other person, and I have medical costs.
Something needs to be done about this problem. They don't mind getting you shot up in Iraq, they don't care that it takes years to get that disability, then they turn you down because you couldn't pay your bills.
I have a combined income of nearly $4000 per month, but I can buy a home. Seems like a lot of banks are missing out on an opportunity because of a has-been situation.
Jones, thank you for your service and your comments. Not sure if you saw this article on military.com but I thought you might find it interesting. http://www.military.com/daily-news/2013/01/28/bal…
My score is 587 and I am having a hard time getting a loan. the worst part is its cause of a divorce and not being able to find a job after the military I had to give my truck up for repossession or not feed my son who I have full custody of. Im hoping I can find a lender soon so I can get out of renting and wasting money that way. now I have a great job ($22/h) just took some time to get here but lost a lot of credit on the way.
Marc, I'm sorry to hear of your challenges. A lot of folks are in the same boat and have to watch the opportunity of low home prices/low mortgage interest rates pass them by while they deal with financial issues. Typically, to purchase a home with a VA loan, most lenders look for a 620 credit score and other qualifying standards like debt-to-income ratio. You may want to contact your Regional Loan Center to see if there are any benefits available to you to assist you with your unique financial situation. Here's a link to find the center in your area http://www.benefits.va.gov/homeloans/rlcweb.asp . In the meantime, do what you can to get that credit score up. Many financial experts say that it could take a couple years for the housing market to get back on track, so depending on where you live you may still be able to buy that home if you take the time to repair your credit and get back on track. Good luck.
I have a problem with trying to refinance my home. I have a tax lien against my home. Does that make the situation worse? I have good job but wife is still looking for a job help.
Lamont: According to the VA, VA home loans can be approved with tax liens if there is evidence of a satisfactory repayment plan in effect. Of course, you would have to qualify for the VA loan on all other fronts with regard to credit, debt-to-income ratio and eligibility. You may want to contact a specialized VA lender like iFreedom Direct or your VA Regional Loan Center to get more information based on your unique situation. Good luck!
I am a veteran and need a va loan. My credit was fine until the auto market crashed and I was stuck in an adjustable rate mortgage. I ended up going through a bankruptcy almost 3 full years ago. I was discharged from the home in the bankruptcy but still reside in the home. The mortgage company will not accept payment from me unless i pay them 24,000 to become current. Are there any options for me as eventually they will want me to leave the home? The auto market has bounced back and my financial situation is fine.
I have been working on cleaning my credit up. My scores are 638,637 and 650 and Wife is 550 as of 9/12/12. Our debt to income is very good. Gross over 8k a month with $2200 a month in revolving credit.. Rented our dream home accross the street and still paying the other mortgage($700). Had a 30 day late mortgage payment in Nov 2011 (almost gone). Have my approval letter from the VA. Question is when can i expect to qualify for a $150k mortgage. What date is the 12 months considered complete. Is there any possibility of getting this in my name only while grossing 52k a year. I have been working with a mortgage broker that knows nothing about the VA loan process and is avoiding it. Who should i call for fast approval. Also have Wartime Veteren Honorable discharge.. Any advice would be great. Thanks for your time!!!
I had a bankruptcy back in 2005 and foreclosure in 2008 it was not VA related, but I did have some late fees on my student loans but now I'm current since 2011 and currently have a 640 middle score and 95% income free can I still qualify for a VA Loan? make 45K
I have my VA loan certificate, income of 51k per yr but my credit bad around 510 with many charge off and collections. I haven’t used my credit in over two years now. My wife is starting to stablish her credit now. She only has one paid closed credit card, one open. Credit card from this year and two paid collections from 2007. Her current score is 629. Our household income is over 80K per year. What are our chances of getting approved if she consigns? Should I file bankruptcy and wait the two years and then re-apply? Thanks
We were just led to believe we could qualify for a VA loan with a credit store of 581. Then when we went back to actually get the loan they claim he needs a score of at least 620 for VA. We have paid rent on time for over two years- that can be verified. We also have 20% plus closing cost to put down. The mortgage would be less than we have been paying in rent, but it seems we have no options. My mother then agreed to co-sign since her credit score is in the 700's. That is a no go also according to the mortgafe company. She says everyone on the loan has to have a score of 620. This is so frustrating. He had a score of over 800 just 3 years ago and then where he worked closed up. Good luck to you!
My husband are overseas and have a year and 9 months lefted before going back to the states and my husband will have 2 years left to retire. We plan to retire in California. Right now the housing prices are somewhat ok, but their slowing going up. My question is would Va allow us to buy a home now while overseas and if it's a HUD home that is sold as is?
Dominique, the VA does make occupancy extensions up to 12 months for active duty military men and women serving overseas. An experienced VA loan officer can help with this. For homes sold "AS IS", many do qualify under the VA Minimum Property Requirements. A VA appraiser will have the ultimate say. If, after the appraisal, it turns out that the home has issues that are relatively easy to remedy, then you may be able to work with the owner to fix them so the house can ultimately pass VA appraisal. It may depend on how hungry the seller is. Good luck!
I have a credit score of 728. I have no negatives on my credit report. I have a home appraised at 278,000. I have a loan of 278,000. I need to roll my pool and some extra cash out, into a 125% LTV loan. My exisiting loan is a VA loan. Any help for me or just suck it up?
Dave–With 100% of your home financed (essentially no equity), you cannot use VA cash out refinance to get money for your needs. If you've added any improvements to your home that were not considered in its current appraised value, you may find its value could increase with a new appraisal. If that doesn't help, it might be possible to qualify for a VA Streamline and add an EEM, Energy Efficient Mortgage backed by the VA. An EEM will provide you with up to $6,000, sometimes more, to make green improvements to your home. Some lenders don't finance the EEM, so you will need to make sure it's an option before you begin the process. Good luck.
My credit score is poor. I recently got a job and I am trying to get back on track although it would probably take some time. I really need a home for my wife and my kids. I was looking at the VA loans, but I think they will turn me down because of my credit. What is my best option?
Mario — VA loans are being approved with scores in the low to mid 600s. With that in mind, you can use these tips from the Federal Reserve to improve your score which can help you qualify for a VA loan. 1) Get a free copy of your credit report from annualcreditreport dot com and check it for errors; errors can be corrected by calling your creditors. 2) Pay all your bills in full and on time; it's a sign of a good credit risk and can raise your score 3) Things like late payments, maxed out credit and too many charge cards can really hurt your score; look at your report and see if these are affecting you and ditch old habits. 4) Call your creditors if you're behind; sometimes they'll help reduce your interest rate on cards or give you a payment plan that better fits your budget. 5) Don't get scammed by debt consolidation agencies; sometimes they cost you more money and make your credit worse. Owning costs less than renting almost everywhere. Getting your credit up to par so you can become a homeowner can help put you and your wife and kids in a better financial state.
We are trying to get approved for home loan. Husbands credit score is 620 range on 2 and the third credit score unknown. A home mortgage place said score only 602. Debt to income ratio great. Husband has old car repossession on credit. Any chance of us getting a VA loan?
Hi Samantha. Sounds like you're real close to qualifying. Minimum qualifying scores for VA loans are between 620 and 640. Perhaps sit down with your loan officer and go over your credit reports and talk about that old car repossession. Major credit firms suggest that you see if there are any obvious mistakes. If so, they advise that you call the creditors yourself and ask them to fix the mistakes immediately and provide you with a written statement acknowledging the error. They also suggest you explain to them you are trying to get a VA loan and the error may be preventing you from doing so. Another piece of advice they give is to look for easy fixes. If you have a credit card that is maxed out, pay it off as it can improve your debt-to-income ratio and your score. Many times a knowledgeable VA loan officer may be able to help you spot two or three ways to improve your score quickly in order to qualify within a reasonably short time.
I am looking to buy a home, I am a disabled veteran 100% service connected. My problem is horrible and I have no idea what to do to get into a home. I have a bankruptcy of over 3 years. I have been working with someone to clean up my report, and have done many things. I do have a late payment with walmart and they refuse to remove it. I don't know what else to do, I am not getting any younger and my husbands credit is worse than mine. My high score is 620 and middle score i think is 585. Someone anyone please help me. Thank you so very much for any help that I may receive. Sandy
Hi Sandra:
I commend you for working so hard to get your credit fixed. A lot of people are in your shoes, so don't think you're alone in this process. The advice given to "Samantha" in this thread would apply to your situation as well. Don't give in, you are getting very close to being able to achieve your dream. And you may find that you can qualify for a loan without your husband's credit. Call your VA Regional Loan Office (you can find a link at http://www.va.gov in the home loan section) or talk to a VA lender and see if they might be able to give you some direction. Good luck to you and thank you for your service.
I am disabled veteran 70% service connected. I suffer from ptsd and my parents may have to be my guardian to care for me and my young child. My score is 620 and my parents scores are 520 each. Are there loans available to help us buy a new home together or will i have to buy one on my own before allowing them to become my and my child's guardian?
My husband is a veteran and we would like to purchase a home with VA Loan. He is full time student so we would have to use my income to qualify. Our credit scores are low (between 550-590). Our total debts combined (old and new), including a car, is less than $20,000. I have steady employment and make over $60k/yr. Is there a lender that would work with us even with our low credit scores?
Joe and I are going to be first time buyers. He works full time for 9 years and makes $30k. I've recently lost my job of 7 years and unemployed but looking to go to school thru VRAP. I received a Certificate of Eligibility for a VA Loan but it states $36,000. I haven't had any luck in Austin, Tx looking for a good home in that bracket. He has about 3 paid off personal loans up to $5k each. We own our cars and don't have any credit cards or loans. We are working on a budget to save until October when this lease is up and want to get out of this 458sqft $700 apartment where the rent keeps going up. Could we get approved for more than $36,000 or is that all VA will approve us for? Also are we able to break an apt lease if we are purchasing a first home? Joe seems to think even if we don't have money down but we have closing costs of up to $2,500, that we can't break our lease.
Hi Carla, you may be pleasantly surprised by this answer. It sounds like you and Joe may be able to qualify for a modest home based on his income alone. The entitlement stated on your COE is the basic entitlement only, and $36,000 represents the amount the VA is willing to back for a loan of up to $144,000. That said, Texas Veterans using their home loan benefits for the first time have enough entitlement for a loan of up to $417,000. What is not revealed on your COE is your tier 2, or bonus, entitlement. This is additional entitlement that can be used for loans over $144,000 and can be calculated by an experience loan professional. Since you are limited to only Joe's income at this time, you may want to get pre-approved with a VA specialty lender like iFreedom Direct to see how much house you can afford and start shopping! As far as your rental goes, the VA may assist military who have been relocated due to PCS in terminating a lease through SCRA. If this move is due to a PCS, you may want to contact your Regional Loan Center and talk to a representative about your options. Best of luck and thanks for your service!
DO NO EVER USE SECURITY AMERICA MORTGAGE! HORRIBLE BUSINESS PRACTICES, ZERO COMMUNICATION WHEN IT COUNTS….RIGHT BEFORE CLOSING! THEY ARE A SCAM!!!! My buyer found them through Military.com and they have really messed with them.
My husband and I went through some hardship 2 years ago with a short sale on a 2nd home after just purchasing our new home with a VA loan caused by loss of job… We considered bankruptcy but were legally advised to settle with our creditors, hold on to our home and work to rebuild our credit. My VA husband is actively employed /secure (14 years) making $100+k but poor credit due to a few settlements (539) – also disabled VA. Me, now gainfully employed 2 years making $100+k, still dealing with credit settlements but also rebuilding credit with a score of 640; we did a loan modification last year and other than that stayed in good graces on our VA loan.. We're making progress. Husband now is being relocated and we both will maintain our current employment status and income but we're going to sell our current home and I'm curious to know if we will possibly be able to qualify again for a VA in another state?
My husband is active duty and we have found our dream home. Our problem is his only line of credit is our car it has not been late or missed in 3 years but for some reason his credit score has not improved very much. can we still qualify for a home
My husband and I are in the process of purchasing our first home together. He already used his VA loan the first time for his first home in Georgia. He is renting it and now we are trying to purchase a home in Hawaii. He's approved up to 650k-700k loan. He's credit score is good 700 and up. Mine on the other hand is okay. 650 to low 700s . I have 1 judgement on my credit history and I just recently addressed it by settling with the Creditors. Do you think we still have a chance to get approved? Our debt to income ratio is about 40%
Hello,
On my COE it says $36,000 dollars. Is this all I am qualified for under the VA home loan program. I am looking to buy a home in Florida (Condo or Townhome) for around $100,000 dolars. I would also like to know if there is a list of foreclosed homes in the Orlando, Florida area that I could peruse on the internet or receive through the mail. Please Help!
Hi Charles, Entitlement is one of the trickiest concepts to grasp, and you are smart to ask an expert. The $36,000 amount you are referring to is your basic entitlement. You may be surprised to know that this amount does not indicate how much you can borrow, rather it is the amount you have in the form of a VA guaranty. The VA will guaranty 25% of every eligible veterans' loan. That said, $36,000 in basic entitlement is enough government backing for a loan of up $144,000. The news gets better! If you've never used your home loan benefits before, then you likely have full entitlement which won't show up on your Certificate of Eligibility at all. Full entitlement will have to be calculated by an experienced VA loan officer. I'd be willing to bet that you have enough entitlement for a loan of up to $417,000. As far as the foreclosed homes list, the VA REO (real estate owned) properties can be found listed by state at http://listings.vrmco.com/ Good luck and thank you for your service.
Hello GTO! Thanks for your comment, and sorry for the hardship you have faced recently. You may have a couple of options here. Enough time may have lapsed from the date of your short sale to be forgiven. If there are other items on your husband's credit report that are affecting his score, then might I suggest the Federal Reserves 5 simple ways to improve credit: 1) Get a copy of your report at annualcreditreport.com and check it for accuracy, 2) pay all bills on time, 3) Learn what items on your report are bringing your score down, 4) Call creditors to have any errors corrected and discuss rate reductions and payment plans to get back on track, 5) Don't fall for credit repair scams. Many borrowers are surprised how quickly they can improve their scores with this method. Your husband may be able to improve his score enough for you to qualify for a joint VA loan with your combined income and combined credit score in the 620-640 range. If your husband's relocation is military-related, then the Servicepersons Civil Relief Act may provide some relief from further legal actions. If your husband can't improve his score enough for you to qualify for a joint VA loan, then perhaps you can use an alternative loan program using just your income and credit alone. Good luck and thanks to your husband for his dedicated service.
I am a disabled veteran and there is no help for me. My home needs a roof and black mold removed from most of my walls. I have tried so many lenders and they all say my 555 credit score means no help. I own my home ferr and clear and everyone says if I had a lean on it they may be able to help with refinancing. No help for just another vet. in West Virginia.
Hi Eric. First, thank you for your dedicated service. As a disabled veteran, you may be entitled to a tax refund from your county assessor under the Homestead Exemption. It may be enough to pay for a new roof and black mold removal without having to qualify for a loan. Call your county assessor for more information. In the meantime, bad credit doesn't have to stay that way. Follow these Fed tips for improving credit. Good luck.
Hello I have a question I am active duty and looking for a VA loan. I checked my credit scores and they were 640, 570 and 550. Not sure why 2 were so low. I do have a chapter 13 from 2009 that will be finished next year. Will the one score of 640 help even if the others are so low? The 640 was from transunion.
Steve is E6 10years of impeccable service. Had good credit prior to me landing in hospital. He missed a few payments and his credit slipped to 580ish. Mine is 620. We just paid off our credit cards and our debt to income ratio is great. He's being medically retired at 80%, 100% service related. We're moving to Aberdeen area thanks to a new job at 90k/yr. Family of 4 and need a home. Any help?
my credit score is 565, and I need to find where I can find out what all i need to do to get a home loan and see all I might be able to do to get one.. where do I go to get help?
Hi James, Today's VA loan qualifying typically requires a credit score of between 620-640 by most lender's standards. You may have to spend a little time improving your credit before you can get that VA loan you are seeking. Some tips for improving credit can be found at http://www.military.com/money/va-loans/bad-credit…. Good luck and thanks for your service!
I am an AD Air Force member about to be med boarded due to knee issues as my disability. My credit is around 540 (thanks to a divorce and an ex). I have had some things removed off my credit since they were not mine. My boyfriend has a credit score of 600 (nothing on his credit report, all his bills have been medical related). Could we get a VA loan with this type of credit? Thanks!
My husband retired sgt for army and credit is low we live in Birmingham ,Al the home we live in we rent but the owner would take $50,000 for it what we need to do.
My husband retired for army and credit is low we live in Birmingham ,Al the home we live in we rent but the owner would take $50,000 for it what we need to do.
My middle score is 616 FOUR points away from being fair! Looking at my credit reports and a mortgage credit report some of this is reported twice, once by the original lender and then by the collection agency. Other debt is outright wrong.
My question is, is there a trustworthy place for veterans that can help me clean up the errors on my reports? Would going to a debt consolidation agency help to improve the rest enough to raise my score to fair credit.
My veteran husband and I are hoping to qualify for a VA loan to purchase a home before having our first child this fall. His credit is in the high 500′s while mine ranges from 610-650. Our combined income is close to $100k. Are both credit scores considered even though only he is a vet? Also, I currently own the small condo we are in (not through a VA loan). How will this impact our qualifications? Do we need to sell prior to applying for a VA loan? Is it possible to keep the condo as a rental and still get a VA loan?
i have 600 score.. 30,000 reenlistment bonus to repay that wasnt discharged through bk in 2007… i have two tow bills i need to settle too… am i eligible for a va loan around 80k to 180k? im gonna have to start making payments on the collections in 2015.. looking at you guys my credit is really horrible.. medical auto and more medical but no credit card debt.. all discharged already.. im making 45k a year now stable rental for two years.. century 21 said i could be up to a good enough score in 90 days.. any good lenders out there u could refer?
I had some financial issues in the past with several late payments and some collections. Last month I paid everything completely off to include two cars and all collections. I no longer owe anyone and any and all income is mine. My credits score is only at 605. Can I still get a VA Home loan. I really would like to be a home owner and not a renter. Please tell me my options.
Can the VA say that you owe them for Medical bills after they are discharged in a Chapter 7 Bankruptcy? Personal injury was in 12/2012 while in an active Chapter 13. Then the 13 was coverted to a chapter 7 in January 2013. They contend that the medical bills from the personl injury are non dischargeable and owed to the VA. However the debt is part of the Chapter 7 since it was incurred pror to the conversion. Can they collect?