Following World War II, the government, wanting to demonstrate the gratitude of an entire country, enacted the VA home loan program. This benefit allows qualified service members and veterans the ability to finance a home purchase while maintaining loan payments. Since the program was established in 1944, it has assisted over 18 million military members become home owners. Advantages to the VA loan over traditional loans is apparent. In comparison to other available loans, the underwriting standards are greatly loosened. Aside from the lighter debt to income ratio (DTI) and residual income standards, the VA loan offers appealing credit requirements.
The Department of Veteran Affairs has not established a minimum credit score needed for applicants to receive loan approval. In fact, the VA loan program will not reject applicants on the solitary condition of low credit scores. Moreover, the program will usually only evaluate the previous 12 months of a borrower’s credit history.
Although there is not a standing credit score requirement for the VA loan, each individual lender may have their own minimum score requirement or standard. The credit score requirement is entirely subjective and will vary greatly between each investor. The presence of collections, judgments, and other unpaid debt may negate a lender from issuing a loan though the presence of such financial adversity may not necessarily result in an automatic denial. Most investors will want to see an acceptable explanation for any late payments in the 12 months preceding the loan application.
If you are concerned that a low credit score may prevent you from successfully securing a VA loan, we recommend contacting VA Home Loan Centers.
In an effort to assist each potential home owner, VA Home Loan Centers has established a software program that will guide any borrower to the best credit possible. The primary purpose of the software is to help borrowers who have been denied loan approval. The software will instruct borrowers how to combat bad debt, remove erroneous reports, and increase overall credit score. Borrowers who are interested in participation in the program are required to contribute a fee.