How to Qualify for a VA Home Loan with Low Credit

Did you know that qualifying for a VA home loan is largely based off the lender’s discretion? In fact, the VA guidelines state that “Underwriting decisions must be based on sound application of the underwriting standards, and underwriters are expected to use good judgment and flexibility in applying the guidelines set forth.”

Since VA home loans are meant to be used as a thank you to our qualified veterans, lenders are encouraged to make VA home loans available to all qualified veterans—even those with marginal credit. With that in mind, take a look at how to qualify for a VA home loan with low credit.

Can I Qualify for a VA Home Loan with Low Credit?

At Homesite Mortgage we take the time to thoroughly underwrite our VA loans. We frequently approve applicants with credit scores below 620, and approve manually underwritten loans—something most lenders deny.

The VA itself does not even set a minimum FICO (credit score) requirement for VA home loans—it’s the lenders who set them. According to the VA Handbook, when evaluating a VA home loan applicant, emphasis should be placed on the applicant’s overall payment patterns instead of isolated occurrences of unsatisfactory repayment. If you have questions about your credit score, contact us—we’re happy to work with veterans in order to qualify them for a VA home loan.

Can I Qualify for a VA Home Loan if I’ve had a Bankruptcy or Foreclosure?

Compared to traditional home loans, qualifying for a VA home loan is much simpler after experiencing a traumatic event in your life, such as bankruptcy. After a Chapter 7 Bankruptcy, the waiting period is only two years from the discharge date as long as reestablished credit has been demonstrated. After a Chapter 13 Bankruptcy, a veteran can qualify for a VA home loan as long as they have been making payments on time for 12 months and have received approval from the Trustee or the Bankruptcy Judge for the new mortgage.

Veterans who have had a foreclosure in the past does not disqualify them for a VA home loan. Many lenders have a rule that you must wait at least two or three years after a foreclosure, but this is technically a lender rule and not a VA home loan guideline. Homesite Mortgage has investors that accept many applicants from various financial backgrounds.

Can I Qualify for a VA Home Loan if I have Outstanding Debts?

The VA does not set the minimum credit guidelines but allows lenders to make the decision based on documentation and rationality with flexibility. In fact, some applicants can get approved instantly with debt-to-income (DTI) ratios as high as 64.99%. If you have a lot of debt and think you have some equity in your home, contact Homesite Mortgage to pay off as much debt as possible.

Homesite Mortgage has minimal credit score requirements, approves manually underwritten mortgages, and provides 100% cash out refinance loans just as a way to say thank you to our veterans for their service.

Don’t let low credit from achieving your dreams of homeownership. Talk to a VA home loan expert today—they can help you qualify for a VA home loan with low credit, and get you into the home you want, on your terms.

Written by Tom McSwain, U.S. Air Force Veteran.