Colorado Mortgage Broker

VA Mortgage Credit Requirements Denver Colorado

If you are looking to buy a home or refinance using your VA Home Loan benefits, you may be wondering what the VA Mortgage Credit Requirements are.  I have written extensively about the VA Funding Fee and VA Home Loan Eligibility, but even if you have eligibility, you must qualify based on your credit as well.

Although VA publishes guidelines for their requirements, each lender has their own interpretation of those guidelines and some will underwrite under stricter policies.  However, below is a summary of how most lenders will look at VA Mortgage Credit Requirements:

Credit Score:

< 620:  There are a few lenders who will still go below a 620 credit score on VA Mortgage Credit Requirements.  However, you must be very strong in other areas such as cash reserves in the bank, job stability, rental history, etc.  Also, expect to pay a higher rate and higher closing costs with these lenders.

620-659:  Most lenders will consider your file with a credit score in this range.  However, expect to pay a slightly higher rate, and your credit history will be analyzed closely.

660-679:  This is a great range for VA and any lender who underwrites VA home loans will have VA Mortgage Credit Requirements in this range.  As long as you meet other guidelines, you will be OK in this range and will get good VA Mortgage Rates.

680-719:  In this range for VA Mortgage Credit Requirements, you may get a little better rates with some lenders.

720+:  with a credit score above 720, most lenders will give you a better rate.  However, if you have a down payment, sometimes a Conventional Home Loan is a better option if your credit is this good.

Credit Report Specifics:

Bankruptcy:  You must be 2 years from the discharge date of your bankruptcy under VA Mortgage Credit Requirements (Chapter 7).   On a Chapter 13, it is 2 years from the file date, and the bankruptcy must be discharged.  You must have re-established credit since the discharge.

Foreclosure:  VA Mortgage Credit Requirements say that you must be 4 years out of a foreclosure.  Short sales will be viewed by lenders as a foreclosure.  A home included in a bankruptcy is considered a foreclosure.  A VA foreclosure will almost certainly result in a denial no matter how many years back it was.

Collections:  Minor collections and medical collections are often times OK, but major items and items over the past 12 months and 24 months with some lenders will likely have to paid off.

Mortgage late payments:  No mortgage lates  over the past 12 months is the general rule.  Some lenders will want 24 months clean for VA Mortgage Credit Requirements.

Delinquent Federal Debt (Tax liens, student loans, for example):  Cannot be approved unless you are in a pay plan and can prove satisfactory payments over the past 12 months with no lates.

Hopefully this helps you understand VA Mortgage Credit Requirements- call with any questions about your specific scenario!