Through the VA home loan program, millions of veterans and service members have become homeowners. VA loans are favored for the following reasons: lower mortgage rates, no PMI required, no down payment necessary, and, to an extent, no minimum credit score requirements.
While the Department of Veteran Affairs does not set a minimum credit score, lenders will have their minimum standard. Read on to understand what this means and how flexible credit score requirements with a VA loan works.
With VA loans, buyers can expect more flexibility and lenient credit guidelines.
Whatever type of loan you are applying for, you need to meet the lender's minimum requirement to secure home financing. Credit scores show a buyer's creditworthiness or how likely a borrower can repay a loan. And as with other types of loans, lenders will offer the best rates to applicants with higher credit scores.
So while the VA doesn't require a specific credit score, the lender --who actually funds the loan --will still have a standard they want their borrowers to meet.
It's worth mentioning that a government-back VA loan comes with much security for the lender, which is why their requirements are considerably laxer. This is notable because low credit scores are a frequent reason for getting turned down when applying for a loan.
So although the VA doesn't enforce a minimum credit score, a minimum score between 580 to 660 is a guideline most often seen with VA loan approval.
PMI is insurance that protects lenders if a borrower defaults on a loan.
Most mortgages have a private mortgage insurance requirement if you put down less than 20%. PMI can be a burden considering that the cost comes to 0.15% to 2% of the loan amount. Not paying PMI is an advantage that VA loan applicants enjoy even when putting down less than 20%!
Buyers can spend years saving for a down payment. But with a VA loan, a home can be financed with no down payment. Conversely, FHA loans have 3.5% minimum down payment requirements, while most conventional loans require 3-5% down. This cost savings is a significant benefit for the military borrower!
VA loan programs have the lowest average fixed rates in the market, with interest rates averaging 0.5 to 1% lower than conventional interest rates.
VA loans were designed to help veterans buy their first properties at affordable prices. Here are the main requirements for a VA loan:
The VA encourages underwriters to follow their income guidelines to determine if a borrower has a stable income and can make payments without any problems.
The guidelines suggest that a borrower's DTI ratio should not be higher than 41%. If the borrower has a higher DTI ratio, other credit factors may be used to determine final approval.
You'll be glad to know that plenty of VA lenders will accept multiple forms of income, including disability pay, basic allowance for housing, retirement income, hazard pay, overseas pay, imminent danger pay, and clothing allowances.
There are other nuances to getting approved for a VA loan beyond a minimum credit score. But there's no need to feel overwhelmed. Our team is well-versed in the intricacies of government-backed loans. Using our experience and digital speed, we'll guide you through the process quickly and effortlessly. Get started today using our secure online application.
We've been helping customers afford the home of their dreams for many years and we love what we do.
Company NMLS: 2027073
2240 Via Puerta
Laguna Woods, CA 92637
Se Habla Español
Kerry G LLC strives to ensure that its services are accessible to people with disabilities. Kerry G LLC has invested a significant amount of resources to help ensure that its website is made easier to use and more accessible for people with disabilities, with the strong belief that every person has the right to live with dignity, equality, comfort and independence.
Kerry G LLC makes available the UserWay Website Accessibility Widget that is powered by a dedicated accessibility server. The software allows kerry-g.com to improve its compliance with the Web Content Accessibility Guidelines (WCAG 2.1).
Kerry G LLC accessibility menu can be enabled by clicking the accessibility menu icon that appears on the corner on the page. After triggering the accessibility menu, please wait a moment for the accessibility menu to load in its entirety.
Kerry G LLC continues its efforts to constantly improve the accessibility of its site and services in the belief that it is our collective moral obligation to allow seamless, accessible and unhindered use also for those of us with disabilities.
Despite our efforts to make all pages and content on Kerry G LLC website fully accessible, some content may not have yet been fully adapted to the strictest accessibility standards. This may be a result of not having found or identified the most appropriate technological solution.
If you are experiencing difficulty with any content on Kerry G LLC website or require assistance with any part of our site, please contact us during normal business hours as detailed below and we will be happy to assist.
If you wish to report an accessibility issue, have any questions or need assistance, please contact us by sending an email to: email@example.com