Having bad credit does not prevent you from fulfilling your dream of homeownership, especially when you apply for a VA home loan program. Designed for veterans, military professionals, and surviving spouses, a VA loan has lenient requirements than conventional home loan programs. So, it is easier for you to ensure approval for a VA loan than other home loan options.
Beyond credit score, mortgage lenders review things like payment history, debts, assets, income, and employment history. So, a credit score is not the only factor that will be considered when approving your home loan application. Besides, you can also apply for the best VA loans for bad credit in Houston.
Do you have questions on VA loans and credit scores? Here are the answers –
- What are the credit score requirements of the VA?
The Department of Veterans Affairs (VA) does not set a minimum credit score requirement for this home loan program. But the VA is not actually lending the money, only backing the mortgage in case you default later. It is because of this, many VA lenders want to see at least a 580 credit score, but the cutoff can vary by lenders, the loan type, as well as other related factors. You may get in touch with a mortgage lender who will be ready to process your VA loan even if your score is less than 580, but you may get a less favorable mortgage rate.
- What are typical credit ranges for a VA mortgage?
It is vital to put that common 580 benchmarks in perspective. The FICO credit score is used by mortgage lenders and typically ranges from 300 to 850. These scores fall into different ranges – excellent, good, fair, and subprime. A credit score over 720 is considered excellent, while below 700 is considered as good, and mid to upper 600 is fair credit. And score below 620 is known as subprime credit. Check your credit score from three major credit bureaus in the U.S., and then apply for a home loan program.
- What will happen in case of previous bankruptcy or foreclosure?
Foreclosure or bankruptcy is a negative factor on a VA loan. However, even after going through any of these processes that can result in being bad or poor credit, you can qualify for a VA loan. Generally, there are two situations. In cases where Chapter 13 bankruptcy has been filed, a veteran or service member is required by the VA to have made on-time payments towards that bankruptcy for s minimum of 12 months before they can be considered for a VA home loan. And when it comes to Chapter 7 bankruptcies and foreclosures, veterans and service members will generally need to wait for two years following the discharge of the bankruptcy or foreclosure. But the wait can be longer based on other things.
Now, opt for a VA lender and apply for a home loan program today. Your dream home will soon become a reality.