Does the VA Loan Program Offer Options for Bad Credit Home Loans?

Robin Kocherhans Robin Kocherhans / Published Oct 30, 2018, 9:25 AM

VA loan application for those with bad credit

Being late or skipping on payments, having accounts that are in collections, filing for bankruptcy, going through a foreclosure., and not having a long enough credit history can all lead to a low credit score.

Sometimes the military lifestyle makes it easier to make these credit mistakes.

Maybe you joined the military right after high school or college and weren't able to build any credit history. Or you may have owed on a credit card and weren't able to pay on time while you were deployed. You even might have simply had too much debt already when you joined.

These situations are very common. Some very small mistakes and understandable circumstances can cause low credit scores for veterans.

However, these issues don't have to stop you from purchasing a home. That's because the VA loan program helps lenders create loans for veterans with bad credit.

VA Home Loan Requirements

The VA doesn't require a minimum credit score in order to qualify for a VA loan. It's even possible to qualify after a bankruptcy or foreclosure.

In addition, veterans home loans also have a more generous and more flexible requirement when it comes to the debt-to-income (DTI) ratio. The general rule is that it has to be 41% and under, though there are some exceptions where it can exceed this amount.

Private lenders are the ones who actually issue VA loans based on the VA's guidelines and some of their own requirements. While some lenders to set their own internal minimum credit score requirements or lower DTI ratios, Low VA Rates doesn't!

We simply follow the VA's requirements, which include:

  • Honorable military service
  • Stable income
  • An intention to occupy the house

It's also important that the home itself meets the VA's minimum quality standards.

All of these standards exist because, ultimately, the goal is for you and your home to be a worthy credit risk with a great chance that you'll make your payments.

Benefits of VA Loans

The benefits of veterans home loans include:

  • No down payment
  • Lower interest rates than conventional loans
  • No private mortgage insurance payments
  • No funding fee for disabled veterans
  • A maximum loan amount of up to $424,100 in most counties

It's definitely worth pursuing a VA loan, even if you think you don't qualify—you might be pleasantly surprised, and it never hurts to give it a try!

How Low VA Rates Works with People Who Have Bad Credit

Low VA Rates works with veterans with any credit score. We have consistently created bad credit home loans for veterans with credit scores below 600.

We're able to do this because we lend on a case-by-case basis, so you'll be seen as an individual, not a credit score. Instead of limiting your financial situation to a single number or isolated, unfortunate events, we prefer to look at your current ability and overall willingness to repay debts. In fact, even a high credit score doesn't guarantee someone will pay!

We believe that rejecting someone based only on a credit score would be as wrong as planning a vacation to the beach based on the average temperature without taking into account current weather forecasts, hurricane warnings, and so on.

Of course, we'll still see what your credit score is, but we'll also look for honorable military service, stable income, a quality house, and other factors.

Contact Low VA Rates today to talk with a knowledgeable loan specialist about how you can get a VA loan even with low credit.