4 Important Things on Credit Score for VA Loan in Houston

A veteran, military officer or a surviving spouse? Want to buy a home and so looking for a home loan program? Well, a VA home loan will be the right fit for you. Guaranteed by the VA and offered and approved by VA lenders, this loan option helps military professionals realize their dreams of homeownership easily.

While conventional loans have a good loan requirement, for VA loan, the requirement is much lenient. Even there is no minimum credit requirement set by the Department of Veterans Affairs for this loan. However, as the lenders approve this loan, you need to fulfill their requirements to ensure approval. So, you should ask the lender about the credit score for VA loan in Houston. Besides, you should know these things related to VA loan and credit score.

  1. No credit history

Not having a proper credit history is an issue for lenders. Some lenders may create no problem, even if you have only one credit score. However, it would need to meet their in-house benchmark. Homebuyers who don’t have a good credit score will often need to spend time for creating a good credit profile before applying for a VA home loan. Some mortgage lenders may consider non-traditional credit tradelines for borrowers with a minimal credit history, but these guidelines will vary by lender.

  1. Chapter 13 Bankruptcy

If you abide by the VA guidelines, you will come to know that they will consider a borrower still paying on a Chapter 13 Bankruptcy if the payments to the course have been satisfactorily made and verified for a period of twelve months. Moreover, the court trustee should give written approval to proceed further. A full explanation of the bankruptcy will also be required. So, you should come with this. The borrower should also need to re-establish a decent credit score, have good job stability, and qualify financially.

  1. Chapter 7 bankruptcy

The VA guidelines state that a minimum of twenty-four months should elapse after the discharge date of the borrower and/or spouse’s Chapter 7 bankruptcy, not the filing date. A full explanation of the bankruptcy will be needed. The borrower should also have re-established good credit, qualify financially and have a stable income.

  1. Collections and federal debts

Mortgage lenders might have a maximum allowable threshold for derogatory credit that can include collections debt. Those caps can vary by lender and several other factors. Borrowers who have defaulted or who are delinquent on any federal debt might need to be on a repayment plan with a history of on-time payments. Moreover, mortgage lenders may not move forward with a VA loan until you are cleared from the federal debt database known as CAIVRS. Talk with a lender if you have more questions regarding this.

Check your credit score before applying for a VA loan. And if it is not good, take steps to improve it and then apply for the loan to a reputable lender.

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