How does the process for using a VA home loan work? Will I be able to qualify if I have terrible credit but stable income?

SPC Onel Cruz — Sat, 05 Jan 2019 18:05:41 -0500

I was told by a fellow veteran that I can apply and get approved for a VA home loan even if I have terrible credit (520)but have stable income. If this were true, then where do I start to get the ball rolling?

Response by Sgt Private RallyPoint Member made Jan 5 at 2019 6:27 PM

Sgt Private RallyPoint Member — Sat, 05 Jan 2019 18:27:31 -0500

SPC Onel Cruz Information about the VA Loan program.

https://www.benefits.va.gov/homeloans/

VA Home Loans Home

Main entry page for the VA Loan Guaranty Service.

Response by Sgt Private RallyPoint Member made Jan 5 at 2019 6:32 PM

Sgt Private RallyPoint Member — Sat, 05 Jan 2019 18:32:02 -0500

SPC Onel Cruz Type "VA Home Loan" in the Search Bar above, hit enter, and then click on "Answers". You will find other Posts dealing with VA Home Loans.

Response by SGT Private RallyPoint Member made Jan 5 at 2019 11:04 PM

SGT Private RallyPoint Member — Sat, 05 Jan 2019 23:04:50 -0500

I just checked into that and you’d be surprised at how it works. They do check credit scores and go off your income and your spouses if you have one. If you don’t have the best credit it may not be a good idea to invest in now until you build up that score. They also consider other things you pay for- in my case daycare and other bills. I spoke with veterans united lenders and they gave me great info.

Response by SGT Chris Padgett made Jan 7 at 2019 12:56 AM

SGT Chris Padgett — Mon, 07 Jan 2019 00:56:29 -0500

The VA does not issue loans, they guarantee a portion of the loan if you default. The VA doesn't perform a credit check. So, where the VA is concerned, they don't care what your score is. But...... a lender will check and care. Minimum credit scores will vary from lender to lender. The cheaper the home, the more likely the approval rate with bad credit. But, that may create a new issue. A cheap home usually translates to a home the VA will not approve. The home must be safe, livable and your primary residence.
I would work on improving your credit score. You would be amazed at how easy that is. It takes time and you have to work staying on top of it. The FCRA is your friend and use it to your advantage. A lot of times a negative mark on a credit report can be resolved with a well written letter.

Response by CW4 Craig Urban made Sep 1 at 2019 12:16 PM

CW4 Craig Urban — Sun, 01 Sep 2019 12:16:18 -0400

Your credit score needs to be above 700

Response by SPC Julio L R. made Sep 5 at 2019 11:16 AM

SPC Julio L R. — Thu, 05 Sep 2019 11:16:27 -0400

I am in the same process. My agent (home loan rep) from my financial institution told me that VA requires a score of at least 620. So I have to do what ever needed to get my score up. That will take about 3-4 months. That will qualify me for a $100,000.00 home max.

Response by SPC Julio L R. made Sep 5 at 2019 11:56 AM

SPC Julio L R. — Thu, 05 Sep 2019 11:56:12 -0400

Open a credit builder loan with your financial institution and try to pay off your smallest debts.

Response by PVT Robert Vickers made Jan 22 at 2020 9:38 PM

PVT Robert Vickers — Wed, 22 Jan 2020 21:38:34 -0500

Howdy Onel, I already have a mortgage with Wells Fargo Bank goin on 11 years.Not gonna get crazy about details but I was medically retired before I got my V.A.Benefits started got my v.a.certificate went to see about a Refi & they told me that using it would add 1-2 points to my interest rate! I am Beliven that either the mortgage company is ignorant and Or greedy! I think V.A. needs to get with the mortgage company's & clarify this! It really doesn't make sense! Best Wishes Brother!!

Response by Sgt Chris Cornejo made Jan 22 at 2020 10:21 PM

Sgt Chris Cornejo — Wed, 22 Jan 2020 22:21:45 -0500

Mr. Cruz, check with a lender that specializes in VA loans only. They are the experts. I have had some credit issues and was still able to use my benefit. The lender had me document what was the cause of the credit issues. I wrote a statement regarding the late payments that showed up on the credit report and the issues that caused it. You just never know if you can qualify until you get with a lender. They will help you and they do loans 24/7. You are not the only one with credit issues and has asked for help. I hoped this helped.

Response by SSgt John Wise made Jan 22 at 2020 11:51 PM

SSgt John Wise — Wed, 22 Jan 2020 23:51:01 -0500

I can connect with you so we can discuss things. I am not a realtor or a lender just a disabled veteran with connections

Response by Sgt Norma Alvarez (Sgt. Norma Semonski) made Sep 8 at 2020 5:20 PM

Sgt Norma Alvarez (Sgt. Norma Semonski) — Tue, 08 Sep 2020 17:20:20 -0400

A 520 credit score is not one that is going to make the process an easy one however, loan approval comes from 3-source criteria: capacity, collateral and community. If there is a good reason why you have defaulted on required timelines for all of your loans during a period of time... 3-months late on every loan caused by un-funded or underfunded deployment support... well then you can use your 3 C's in support to relieve the concern of a lowered score caused by that time period by assuring all payments for the next 6+ months are 100% current, get letters from employers, command supporting your claim (Community), show deposits and balances in your bank account (capacity) and if you have collateral (proof of ownership of something equaling 50% or grater then the required down payment **** OR **** a good co-signer) you can have the workings toward a possible productive communications with a lender's finance department. Take notes on what that person is stating as lender requirements and know that a requirement can often be eased by providing a greater down payment because this lessens their initial exposure toward loss. Also, ask how long they actually own a note once approved. Knowing this basically tells you how much more down payment it would take to become approved. If they keep the paper for 5 months before selling it off (a very standard banking process) then you know a pretty good additional down payment number to aim for as well as assuring that you now stay 100% current on all of your dept's during that time frame. Little red flags on a credit report: current phone and late on car payments tells a lender that you are not a good credit risk however it looks even worse if you are current on your phone and late on your rent payment. Debt to a lender is IMPORTANT. Your income CAN NOT simply cover your monthly gross scheduled payments... if that is currently how you are making payments then you will not qualify for a loan because you have nothing left over to live... expect to show that you have 20% of your income extra monthly after food, fuel, utilities, car payments, rents and the like and that will increase your credit score. I hope this has been helpful and welcome any further questions to assist toward this end. Blessings moving forward with your VA home loan.