What Credit Score is Needed for a VA Loan?

February 13th, 2012 | Author:

VA loans are home loans that are offered to certified veterans who have been out of active duty for at least two years. This is a great program to take advantage of, regardless of credit score, but it does option a very attractive option for those who have less that perfect credit who might not qualify for a home loan in any other way. The VA loan program is a means by which home ownership for veterans is possible, regardless of credit history. One must be able to manage mortgage payments, of course, but poor credit will not block one from getting a VA loan, nor will it shoulder someone with undue financial burden by way of excessively high interest rates.

In order to qualify for a VA loan, one must possess a VA Certificate of Eligibility. The form for this can be filled out online, at your local VA office and even at many real estate offices. These loans are generally for either 15- or 30-year fixed rate mortgages that allow our veterans the ability to own their own home.

The VA itself does not have a minimum credit score requirement in order to qualify for this loan program, but the lenders that work with the VA do generally have requirements. Those with scores as low as 580 have been approved for VA loans, but most lenders have requirements that one must have a credit score of at least 620 to qualify for a loan. In addition to this minimum credit score, you can also have no negative marks on your credit report in the past year.

There are many benefits to a VA loan, as they allow for lenders to provide favorable loan terms to veterans, even those with less than perfect credit, rivaling the rates of those with great credit who obtain a loan without the VA loan program. With a VA loan, you either provide a very small, or no down payment at all to get into your home. You also do not have to carry mortgage insurance on your home, which can save you a significant amount of money. The VA guarantees your loan for 25% of its total value, in the event that you default on your loan. This guarantee allows lenders to give you loan terms as though you were putting down a 25% down payment on your home, allowing you to take advantage of very favorable rates, regardless of poor credit score.

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