VA Home Loan Credit Requirements
The Veterans Administration requires that lenders complete a thorough review and analysis of a borrower’s credit profile before making a VA home loan. VA home loan credit requirements are more lenient that conventional and FHA loan requirements.
VA Home Loan Credit Score
The VA does not have any VA home loan credit score requirements to qualify for a VA home loan. However, Supreme Lending does have a middle credit score requirement of at least a 620 FICO. A 620 FICO score with at least two credit bureaus is required and if the veteran applies for a VA home loan with a spouse; the lowest middle credit score will be used to determine the interest rate.
Trade Line Requirements
National Guard members, Reservists or veterans who choose to use their VA entitlement to purchase or refinance a home must have three or more open and active trade lines (credit accounts) that have been reviewed for at least twelve months.
If you do not meet this VA home loan credit requirement, you may use alternative trade lines. These alternative trade lines can be used to create an acceptable credit profile. Accounts like utilities, car insurance, rent and more can be used.
Collections accounts showing on a credit report do not necessarily have to be paid, but may require an explanation for the circumstances surrounding a collection account. In some states, a VA underwriter can require collection accounts to be paid, even those of a non-purchasing spouse. Medical collection accounts on a VA loan do not have to be paid.
Multiple collection accounts may have a negative effect on the amount a National Guard member, Reservists or veteran may qualify for.
A charge-off account is an account in which the creditor has legally declared the debt as severely delinquent and is unlikely to be able to collect. VA home loan credit requirements require a letter of explanation for all charge off accounts and a VA underwriter may require the account(s) to be paid in full or in a repayment agreement with the creditor.
Multiple charge-off accounts may have a negative effect on the amount a National Guard member, Reservists or veteran may qualify for.
If you currently have a judgment against you, the account must be paid in full or in a repayment plan to pay off the judgment. VA home loan credit requirements will require a copy of the repayment agreement and a letter of explanation for the judgment.
Judgments recorded against title on your existing home will require a subordination agreement from the creditor.
Tax liens must be paid in full or currently under a satisfactory repayment plan with the taxing authority who filed the lien.
Tax liens recorded against your property will require a subordination agreement from the taxing authority.
All disputed accounts require a letter of explanation and any supporting documentation. Multiple disputed accounts can negatively affect the automated feedback for a VA home loan. This negative affect may limit the amount a service-member may qualify for and increase their interest rate.
VA home loan credit requirements allow a VA underwriter to require that disputed accounts be resolved for a loan approval. Because disputed accounts do not have an impact on a borrower’s credit score, removing a dispute could have a negative impact on your credit score.
For a detailed explanation, please visit our VA Mortgage Loan FAQ Bankruptcy page.
For a detailed explanation, please visit our VA Mortgage Loan FAQ Foreclosure page.
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