Am I Eligible For VA Loans With Bad Credit?

By now, you’ve probably heard that VA Loans have easier, more relaxed credit requirements than other loan programs. But what exactly does that mean? How do you reach your dreams of homeownership, with VA Loans and Bad Credit?

First of all – did you know the VA does NOT have a minimum credit score requirement for borrowers to qualify for a loan? But don’t write that down. You see, the VA doesn’t lend money. You need a lender, like Aligned Mortgage, for financing. So, while the VA itself doesn’t have credit requirements, individual lenders do.

Lenders set their own requirements, or follow investor overlays, so being eligible for VA loans with bad credit will vary based on the individual lender. In general, most lenders prefer a credit score of at least 620 to qualify for any type of mortgage, including a VA loan.


VA Loans With Bad Credit Vs Conventional Loans Credit Requirements

“VA Loans are more lenient than conventional when it comes to your credit history. In fact, VA has no credit limit, though it is true that VA lenders generally look for a 620 FICO score, which, in layman’s terms means ‘Fair’ credit (followed by ‘Good’ and then ‘Excellent’). Conventional loans often require a 680 minimum credit score, although you may need more like a 740 to have a shot at the best rates and terms.” — VA.Gov

We are more than just a lender. Here at Aligned Mortgage, we understand that building and maintaining a fair and solid credit score can be especially difficult for service members. The demands of military life can be tough on a budget. Most service members don’t get to decide where they are stationed and living. Keeping a healthy credit score can be hard from overseas, among other challenges.

Aligned Mortgage, our minimum credit score is just 580 if your loan amount is below the county loan limit. Anything over that requires a score of just 600. We believe that credit doesn’t determine character. Our job is to bridge the gap between where you are currently, and where you want to be – homeownership.

The VA Loan relies on more than just credit scores and debt-to-income ratios. It is a budget-based loan and has residual income requirements. This means, we look at the big picture and make sure our veterans are set up for success.

Learn more at one of our free VA home loan seminars, or start to day and get pre-approved!