How Does Credit Affect Your Loan?
A person’s credit score can say a lot about them. The number is based on a person’s creditworthiness. A credit score is a good way for lenders to determine how likely a borrower is to pay back their loan. Credit scores are a useful screening tool for credit card companies, banks and mortgage lenders. All prospective home buyers are subject to credit checks to qualify for home loans.
For Veterans hoping to secure a VA home loan, credit scores are just one detail lenders will look to for approval. Because the loans are offered by private lenders, the Department of Veterans Affairs does not set a minimum required score. Instead, those hoping to get a VA home loan will need to meet the scores set by private mortgage lenders. Your entire credit profile, not just your credit scores will be considered when your VA loan is being considered for approval.
VA Credit Requirements
The VA does not have a minimum credit threshold to be met. It also does not have a maximum debt-to-income ratio. Borrowers must prove to mortgage lenders that they can repay their loan and still cover living expenses and other debt. Though the VA does not set a credit score minimum, private lenders typically do.
Contrary to popular belief, the VA does not issue any home loans themselves. They do, however, guarantee home loans for Veterans. This VA loan guarranty allows prospective buyers with low credit scores and no down payment to qualify for financing whereas they would be otherwise out of luck. Private lenders like SoCal VA are eager to help Veterans into their new homes.
VA home loans are even available for those who have declared bankruptcy or had their home foreclosed upon. Bankruptcies caused by medical debt or a failed self-employed business venture are not considered negative credit factors. So long as you don’t have any outstanding VA home loans on the record, you will likely be eligible for a VA loan.
Lender Credit Requirements
Every lender differs on credit score minimums. Typically, though, private lenders will only consider those with a credit score of at least 620 for home loans. In addition to a credit report, borrowers will also need to provide information like work history, and gross monthly income when they apply for a VA home loan.
In order to begin the process, Veterans will need to get their Certificate of Eligibility, or COE, from the Department of Veterans Affairs. While the VA does not offer home loans itself, the agency does work to certify Veterans hoping to become homeowners. To get your COE, simply visit the VA’s website. and download VA Form 26-1880. Or if you would prefer a more personal touch, a So Cal VA Homes Client Service Specialist would be happy to obtain your COE for you.
The application for a COE will ask about your active duty status, dates of service, discharge date, and previous VA loan usage information.
Don’t Qualify? Try, Try Again
It can be frustrating to be denied a home loan by a lender because of your credit score. Thankfully, there are steps you can take to improve your credit score and other factors on your home loan application. After improving your credit standing, the opportunity to get a VA home loan will be waiting.
If you’re hoping to improve your credit score, there are a few important ways to do so. Always pay your bills on time and keep balances as low as possible. Avoid opening new accounts whenever possible. Pay off your credit card balances but keep the card open. It’s also a good idea to perform routine credit checks and monitor for errors.
Veterans can apply for VA home loans as many times as they would like. This amazing benefit does not expire, nor is there a limit on how many homes a Veteran can buy. The only exception to the rule? You must intend to live in the home that you purchase with your VA loan.
The Right Lender for You
Any Veteran hoping to become a homeowner should consider partnering with SoCal VA Homes for the journey. Not your average real estate company & VA lender, SoCal VA Homes chooses only to hire military Veterans whenever possible. We have assembled a team of very knowledgeable Sr. VA Loan Technicians who only work with VA loans. This ensures Veterans can take full advantage of their VA loan benefits with confidence. Our staff is passionate about helping you fulfill your dreams of owning the right home for you.
No matter what is on your credit history, we’ll work with you to create a plan to get you into your new home. While it may take a little more gathering of information to qualify for a VA home loan, the benefits are definitely worth it. Whether you’re hoping to renovate, build or buy a home, SoCal VA Homes is here to guide you through every step in the process.
Ready to get started? Give our team a call at 949-268-7742 or get your copy of The Plan which begins here and finishes with your keys to your new home in your hands!