{"id":4602,"date":"2020-09-21T11:07:08","date_gmt":"2020-09-21T11:07:08","guid":{"rendered":"https:\/\/dreamhomefinancing.com\/?p=4602"},"modified":"2020-10-30T15:15:32","modified_gmt":"2020-10-30T15:15:32","slug":"va-loan-with-bad-credit","status":"publish","type":"post","link":"https:\/\/dreamhomefinancing.com\/va-loan-with-bad-credit\/","title":{"rendered":"VA Loan with Bad Credit – Scores 500-620"},"content":{"rendered":"

VA Loan with Bad Credit \u2013 Scores 500-620<\/strong><\/span><\/h2>\n

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VA loans are available with no down payment requirement for veterans, active military and their spouses with credit scores as low as 500. It is one of the better mortgage programs available and a great benefit to our deserving veterans.<\/span><\/p>\n

VA loans are also available for credit scores as low as 500. However, many lenders have their own minimum credit requirements of 620 or more which makes it difficult for some veterans to qualify for a VA loan.<\/strong><\/span><\/p>\n

VA Loan Requirements with Bad Credit<\/strong><\/span><\/h3>\n

The requirements for VA loans are more flexible than any other loan program available. Here are the basic requirements:<\/span><\/p>\n

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  • Eligible applicants must be a veteran, active military or spouse with available home loan entitlement<\/span><\/li>\n
  • You must occupy the property as your primary residence<\/span><\/li>\n
  • Two-year work history and\/or active duty<\/span><\/li>\n
  • No down payment needed<\/span><\/li>\n
  • Typical credit score requirement of 620 or more<\/span><\/li>\n
  • No specific DTI requirement<\/span><\/li>\n
  • No maximum purchase price<\/span><\/li>\n<\/ul>\n

    If the DTI or purchase price are very high, the lender may ask for a down payment.<\/span><\/p>\n

    Why Some VA Lenders do Not Accept Poor Credit <\/strong><\/span><\/h3>\n

    VA lenders are protected from part of the loss in the event of a foreclosure or default. The amount they are insured for by the VA based upon your entitlement calculation so it is not a 100% coverage or guarantee by the VA.<\/span><\/p>\n

    The coverage against loss is good for the lenders but they are still not covered 100%. They are also in the business of making money and if the borrower is not making the mortgage payments, then the lender still has some risk. It is for this reason why lenders have their own credit score minimums.<\/span><\/p>\n

    Borrowers with lower credit scores typically struggle to make debt payments which is why their credit scores are lower. Lenders do not have an appetite for dealing with late payments and starting the foreclosure process is not good business for VA lenders.<\/span><\/p>\n