VA Minimum Credit Score Requirements and Guidelines
In this article, we will cover and discuss the VA minimum credit score requirements to qualify for VA loans. The United States Department of Veterans Affairs (Referred to as The VA), has created and launched the VA Home Loan Program for our men and women of the United States Armed Services. Veterans of the United States Military with a valid Certificate Of Eligibility (COE) can qualify for VA loans with 100% financing and no down payment.
VA Loans For Bad Credit and Low Credit Scores
Our government wanted to show our appreciation for active and retired members of the U.S. Military by creating the VA loan program for their service. The VA loan program has the most lenient mortgage guidelines versus other loan programs. Borrowers can qualify for VA loans with bad credit and low credit scores. VA loans have lower waiting period requirements after a housing event than any other loan program. For example, it is a three-year waiting period after a foreclosure, deed in lieu of foreclosure, or short sale to qualify for FHA loans.
VA Loans After Bankruptcy and Foreclosure
The VA’s waiting period requirement after bankruptcy, foreclosure, deed in lieu of foreclosure, and a short sale is two years. The waiting period after bankruptcy and foreclosure is shorter than for FHA and USDA loans. The waiting period after a housing event is three years on FHA and USDA loans. Re-established credit after bankruptcy and/or a housing event is required. No late payments after bankruptcy and/or a housing event.
VA Loans Credit Score Requirements
All loan programs have a minimum credit score requirement with the exception of VA loans. VA mortgages have no VA minimum credit score requirements with an approve/eligible per automated underwriting system (AUS). You can get an approve/eligible per automated underwriting system on VA loans with credit scores down to 500 FICO as long as you have had timely payments on all of your debts for the past 12 months.
Debt to Income Ratio Caps on VA Loans
The Veterans Administration does not have a maximum debt-to-income ratio requirement with an approve/eligible per AUS. With such lenient credit/income guidelines, VA loans remain to be the best-performing residential mortgage program for decades.
To get a VA Automated Approval, the borrower should have a lot of residual income. In this blog, we will discuss VA minimum credit score requirements and other pertinent Guidelines.
VA Agency Guidelines Versus Lender Overlays on VA Loans
Over 75% of our borrowers at Non-QM Mortgage Brokers are folks who could not qualify at other lenders due to their lender overlays. These borrowers met VA Agency Guidelines but not the lender overlays who they initially consulted. There are two types of VA Lending Requirements. VA agency Guidelines Versus Lender Overlays. VA Agency Guidelines are the minimum VA lending requirements per the U.S. Department of Veterans Affairs (The VA) to get approve/eligible per the automated underwriting system (AUS).
Lender Overlays on VA Loans
Lender Overlays are additional VA Lending Requirements imposed by individual mortgage lenders. Just because a borrower may meet all VA Agency Guidelines and gets an automated AUS Approval does not mean they will qualify with all lenders. Non-QM Mortgage Brokers is a mortgage company licensed in multiple states with no overlays on VA loans.
We do not have any additional mortgage lending guidelines on VA loans. We just go by the automated findings on the AUS. As long as you get an automated underwriting system approval and can meet all conditions, then your VA loan will not only close but will close on time at Non-QM Mortgage Brokers
The VA Eligibility Mortgage Guidelines on VA Loans
Only active and/or retired members of the United States Military with a valid Certificate of Eligibility (COE) are eligible to qualify for VA loans. Below are the minimum VA Agency Guidelines:
- 100% financing with no down payment required
- Up to 4% in sellers concessions by home sellers for buyer’s closing costs
- There is a two-year waiting period after bankruptcy, foreclosure, short-sale, or deed in lieu of foreclosure to qualify for VA loans
- Outstanding collections and charge-off accounts do not have to be paid off
- There are no VA Minimum Credit Score Requirements on VA loans as long as borrowers can get an AUS Approval
- There are no maximum debt-to-income ratio requirements on VA loans as long as borrowers can get an AUS Approval
- Borrowers in Chapter 13 Bankruptcy Repayment can qualify for VA loans one year into the repayment plan with Trustee Approval and manual underwriting
- Chapter 13 Bankruptcy does not have to be discharged as long as the borrower is making timely scheduled monthly payments
- There is no waiting period to qualify for VA loans after the Chapter 13 Bankruptcy discharge date
For more information on this blog or other mortgage topics, please contact us at Non-QM Mortgage Brokers at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Non-QM Mortgage Brokers are experts in helping borrowers qualify and get approved for VA loans.
This blog on VA minimum credit score requirements and guidelines was updated on November 4th, 2022.
