VA Home Loan Credit Score

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Troy Reichert

Troy Reichert is the owner of Reichert Mortgage LLC. With over 20 years of serving the United States Airforce, Troy wants to continue to give back to the community by helping give people their best chance at securing a home.

The VA Home loan was created in the Servicemen’s Readjustment Act of 1944 to help qualified active duty and veteran military members returning home from WWII buy a home, even with a less-than-ideal credit score. This loan program was designed to make it easier for veterans to buy homes by guaranteeing loans made by private lenders. This reduced the risk to lenders so they would be more willing to make loans to veterans. The VA loan program has been expanded over the years to include veterans of all wars and is now one of the most popular mortgage programs in the United States. 


What is the minimum credit score for a VA loan?

The VA does not set a minimum credit score for VA loans, however, most lenders will have a minimum score requirement. A VA loan is a mortgage loan guaranteed by the U.S. Department of Veterans Affairs (VA). This means the VA will cover a portion of the loan should the borrower default. VA loans offer a number of benefits to eligible borrowers, including:

  • No Down Payment
  • No Private Mortgage Insurance (PMI)
  • Flexible Credit Score Requirements
  • Ability to Refinance Existing Loans

What credit score do you need to get a VA loan?

While the VA does not have a minimum credit score, most lenders will require a FICO score of at least 620, depending on the lender. A higher credit score will typically qualify you for a lower interest rate and better terms on your loan.


Does VA home loan care about credit score?

The VA home loan was designed to thank veterans for their service and help veterans buy homes. Lenders can put less emphasis on the credit scores of VA loan applicants for many reasons:

  • The VA guarantees the loan. This means that the VA will cover a portion of the loan if the borrower defaults. This reduces the risk to lenders, allowing them to be more lenient on credit score requirements.
  • Veterans are considered to be good borrowers. Studies have shown that VA loans consistently outperform FHA loans in terms of delinquency rates. This helps lenders recognize VA loans as less risky than other government-insured mortgages making it easier for veterans to find willing lenders.
  • The VA loan program has other requirements that help mitigate the lender’s risk. For example, most VA loans have a maximum debt-to-income ratio requirement of 41%. This helps to ensure that borrowers, even those with lower credit scores, can afford the monthly mortgage payments.


Can I get a VA loan with 580 credit score?

Since the VA sets no requirement for credit score, you may still be able to get a VA loan from a lender who has a more lenient credit score requirement, even with a credit score of 580. You may consider working with a lender who specializes in VA loans and Joint VA loans, and work to improve your credit score.


Can I use my VA home loan with a 500 credit score?

Some lenders may still work with you on approving a VA loan even with a credit score of 500. You can expect to pay much higher interest rates than other VA loan holders, and will likely need a down payment in order to be approved for your loan. Speak with your lender to see if they offer flexibility with your minimum credit score for a VA loan.


VA Loans credit requirements compared to other loan programs

VA loans are a great way for eligible borrowers to buy a home. Compared to some other loan programs, the relaxed credit score requirements make them a good option for borrowers with less-than-perfect credit. However, it is important to remember that there are other factors that lenders will consider when approving a VA loan. Ask your lender if you qualify. 


What is the minimum credit score to buy a house?

The minimum credit score needed to buy a home depends on the type of home loan you wish to apply for, the amount you wish to borrow, and your other income and debt history. Regularly expected minimum FICO credit scores are as follows:

FHA Loan: 580 minimum credit score. The Federal Housing Administration (FHA) is available for borrowers with lower credit scores. You can qualify for an FHA loan with a credit score of 580, however, other requirements must be met to receive this loan including a down payment and Mortgage Insurance (MIP).

VA Loan: No minimum VA requirement, but lenders prefer 620+. The Department of Veterans Affairs (VA) offers loans to eligible veterans and their surviving spouses. While there are no minimum credit score requirements for VA loans, lenders may require a down payment or cosigner if your credit score is below 620. Those with credit scores that meet their lender’s requirements can enjoy no down payment and no MIP. 

Conventional Loan: 620 minimum credit score. Lenders usually require a credit score of at least 620 for a conventional loan. However, since lenders set their own terms for conventional loans, some lenders may approve borrowers with a lower credit score, depending on other factors. 

USDA Loan: No minimum, but 640+ preferred. The United States Department of Agriculture (USDA) offers loans to borrowers who are buying homes in rural areas. There is no minimum credit score requirement for USDA loans, however, you may be required to make a downpayment if your credit score is below 640.

It is important to note that even if you have a credit score that meets the minimum requirements, you may not be approved for the loan. Lenders will also consider other factors such as your income, debt-to-income ratio, and employment history. Contact us now to see what loans you qualify for. 

CONVENTIONAL6203% – 20%No MIP with 20% down

Not backed by any government agency. Terms set by individual lenders.
FHA5803.50%MIP (Mortgage Insurance Premium) always requiredInsured by the Federal Housing Administration.
USDA6400%* – 3.5%
0% required for credit score of 640+
MIP is required if down payment is less than 20%
Insured by the United States Department of Agriculture. Only for rural areas.
VANo Minumum0% with credit score of 620+
No MIP with a credit score of 620+
Guaranteed by the Department of Veterans Affairs.


Why doesn’t the VA set a minimum?

The Department of Veteran affairs does not set a minimum credit score for VA-guaranteed loans because the VA loan was created to help all eligible service members and veterans buy homes. Setting a minimum credit score would make it more difficult for service members to qualify for a VA loan. Eligibility for those with lower credit scores and little to no down payment keeps this loan, earned through military service, open to more qualified service members and veterans. 


Getting a VA loan with no credit

If you have no credit history you may still be able to successfully apply for a VA loan. Consider working with a lender that specializes in VA loans. You can also consider starting to build credit as soon as possible with responsible use of credit cards or a credit-building loan with your lender. You will benefit from working with a lender that specializes in VA loans. We are familiar with the VA loan program and VA loan requirements. 

Here are some alternate methods to help prove your creditworthiness to a lender even if you have no credit history:

Offer Alternate credit data: These financial records such as rent payments, utility bills, and cell phone payments. Lenders may consider this information as a way to assess your ability to repay a loan and proof of consistent on-time bill payment.

Consider a Cosigner: A cosigner is someone who has good credit and agrees to be responsible for the loan payments if you default. This can help you gain approval for a loan, even if you have no credit history. The VA allows for this through their Joint VA loan guidelines. 

Prepare a sizeable Down Payment: Making a down payment on a home can show lenders you are serious about buying a home and have the financial resources to do so. This can improve your chances of getting approval for a loan, even if you have no credit history.

Getting a VA loan with Bad credit

Yes, it is possible to get a VA loan even with bad credit. In order to qualify, you will likely need to either have a cosigner with good credit to enter the loan with you or make a large down payment. You may also have to pay a higher interest rate than other VA loan applicants as well as have more stringent terms on your loan. With careful planning and preparation, you can get a VA loan and buy the home of your dreams, even if you have less-than-ideal credit. 

If you are applying for a VA loan with bad credit consider:

  • Getting pre-approved for a loan before you start shopping for a home to give you a better idea of how much you can afford and what kind of interest rate you can expect.
  • Work with a lender who specializes in VA loans. We are familiar with the program and requirements so we can help you understand what you need to do to qualify for a VA loan.
  • Be prepared to provide documentation of your income, assets, and debts. Your lender will need to see all your financial records to help determine if you can qualify.
  • Be patient. It may take longer to get approved for a VA loan with bad credit so be patient and consider working on improving your credit while you wait!

How to improve your credit score for a VA loan

There are a number of things you can do to improve your credit score in order to qualify for a VA loan. These include:

  • Pay your bills on time. On-time bill payment is one of the most important things you can do to improve your credit score. When you pay your bills on time it shows lenders that you are a responsible borrower who can be trusted to repay your debts. 
  • Keep your credit utilization low. Credit utilization refers to the percentage of your current available credit that you are using at this time. This is a major factor in your credit score, making up 30% of your FICO score.
  • Dispute any errors on your credit report. Errors in your credit report can have a negative impact on your credit score. Disputing errors can help improve your credit score quickly by removing negative items that have been added in error. 
  • Increase your available credit. Increasing your available credit helps lower your credit utilization by creating more available credit and dropping your debt-to-credit ratio. 
  • Get a credit-builder loan. A credit builder loan helps build your good credit over time by showing you can consistently make on-time monthly payments, increasing the length of your credit history, and lowering your credit utilization ratio. 

Why are the VA loan requirements for credit scores less strict?

VA loans are less risky for the lender because it is guaranteed by the VA. This reduction of risk allows lenders to be more lenient on their minimum credit score requirements. Because the VA only guarantees a portion of the loan, you will still need to meet other requirements. Consider improving your credit score and debt-to-income ratio to improve your interest rates and eligibility for higher loan amounts. 

What are the VA loan requirements?

In addition to your credit score, other factors that lenders will consider when approving a VA loan include: 

  • Your debt-to-income ratio (DTI). Calculate what you spend on home maintenance, taxes, insurance, premiums, car loans, credit card bills, educational loans, and other monthly expenses. Now calculate your monthly income and determine the ratio between the two totals. The acceptable debt-to-income ratio for VA loans is typically 41% or less. 
  • Your employment history and income. VA loans require that you show stability, continuity, and sufficiency in your employment history and income. This means the borrower must show that their income is reliable and expected to continue in a way that is sufficient to cover their future mortgage payments. 
  • Your assets. Though cash reserves are not required to buy using a VA loan, your lender will want to view your bank records including checking and savings accounts, IRA and investment accounts, pension funds, trust funds, mutual accounts, brokerage accounts, certificates of deposit, and others to ensure sufficient assets and consistency in reported income. 
  • Your military service history. Request a COE (Certificate of Eligibility) from the VA to show that you qualify. Eligible service members need to have served for at least 90 continuous days to meet the minimum active-duty service requirement. Veteran requirements can be found here.

Find out more about VA loans including VA Joint Loans and other Veteran Resources.

Benefits of the VA loan

To get a VA loan, you will need to work with a lender that participates in the VA loan program. The lender will assess your financial situation and determine if you qualify for a loan. If approved, the lender will process the loan and close the transaction. Ready to see if you qualify for a VA loan? Contact Reichert Mortgage today!

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