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7 Credit Flexibilities to Know before Applying for a VA Home Loan Bad Credit

If you are looking for a bad credit VA loan, then you need to aware of some credit flexibilities. Read on to know about these.

If you are a veteran, military professional, or surviving spouse, and want to buy a home, then opting for a VA loan program will be the right choice for you. This is a specially designed home loan program that is backed by the government.

Besides, if you have a low credit score, you can apply for a VA home loan bad credit in Houston. The credit flexibilities associated with this loan makes it possible for you to get approval with a low credit score. Here we have discussed these flexibilities in detail -


1.       No minimum credit score

There is no minimum credit score set by the VA. But most lenders ask for at least a 580 credit score. But the last 12 months of payment history are checked properly, especially your rent or mortgage payments. You can overcome a poor credit payment history with explanations or proof of active-duty deployments or disability-related health challenges.

2.       2-year waiting period after Chapter 7 bankruptcy

The VA is sensitive to service-related issues, which may lead to bankruptcy filings. Borrowers who are military professionals need to wait for at least two years from their bankruptcy discharge date to apply for a new VA loan. You can ask your borrower about this.

3.       1-year of payments on a Chapter 13 bankruptcy or credit counseling

 VA borrowers who have made 12 on-time monthly payments as part of a Chapter 13 bankruptcy or credit counseling program may qualify for a new VA loan. So, make sure to make 12 on-time payments.

4.       2-year waiting period after a foreclosure

Military professionals who lost a home to foreclosure are eligible for a VA loan after two years post-closing.

5.       VA foreclosure flexibility

Being a VA borrower, you can take out a new VA loan, even with a foreclosed VA loan on their certificate of eligibility. If you have enough VA entitlement remaining, then you can buy a new home with no down payment.

6.       No credit history

Veterans who return from deployment may not have the required payment history for a conventional credit score. In that case, VA lenders may consider utility, rent, automobile insurance, and other alternative payment histories to make an approval decision.

7.       Residual income

The VA uses a unique calculation. And they base it on how much free cash you have each month after subtracting monthly expenses, along with maintenance on your home. Also familiar as “residual income”, you may qualify for a VA loan with bad credit in case you have extra room in your budget each month.

Getting approval for a VA loan with a low credit score is not difficult as this loan has several credit flexibilities. And if you can take steps to improve your credit score, then you could get approval easily. So, take the required steps and ensure VA loan approval.

Joan Galardo


Residential Commercial Mortgage Loan Originator at Clear Lending.

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