3 Common Questions on the Best VA Loans for Bad Credit in Houston

Real Estate

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September 7, 2020

Having a bad or less than perfect credit is something that no one likes, especially if they are about to apply for a home loan program. You would also not like to have bad credit when you are thinking of applying for a VA loan program – a specially designed home loan program for veterans, military officers, and surviving spouses. But what will you do if you have a bad credit score? Will you stop dreaming of your own house? No!

It is because you can apply for the Best VA loans for bad credit in Houston. It will help you get the loan and buy a home of your choice. But do you have questions regarding this home loan program? Here, we have tried to answer these –

Is it possible to get a VA loan with a bad credit score?

While bad credit makes the process of getting approval for a VA home loan difficult, it does not it is completely impossible. Besides credit scores, the VA lenders check several things, such as your payment history, debts, assets, income, employment history, down payment, and more. If you can meet other requirements successfully and your lenders offer low credit VA loans, then you can get approval for this loan even with low credit.

What are the VA’s credit score requirements?

The Department of Veterans Affairs (VA) does not set a minimum credit score requirements for borrowers. But the VA does not actually provide the loan; they guarantee the loan in case the homebuyer later defaults. This is why; many VA lenders want to see a good FICO credit score, but the cutoff can vary by the lender, the loan type, as well as other factors. You may get in touch with a VA lender willing to process your VA loan even if your credit score is less than 580, however, you can encounter less favorable interest rates. So, if your credit score is low and you want to secure the best mortgage rate, then you should take steps to improve your credit score, such as paying debts on time, not applying for any new credits, rectify credit card mistakes, etc.

What happens if the borrower has had a previous bankruptcy or foreclosure?

Bankruptcy and foreclosure are negative factors on a VA loan program. However, even if you have undergone one of these processes, you may still qualify for a VA loan – even with the result being bad or poor credit. Generally, there are two typical situations –

  • In cases where Chapter 13 bankruptcy has been filed, a veteran, military officer, or surviving spouse is required by the VA to have made on-time payments towards that bankruptcy for at least 12 months before they can think of a VA home loan.
  • When it comes to Chapter 7 bankruptcies and foreclosures, veterans and services members will typically need to wait for 24 months following the discharge of the bankruptcy or the foreclosure. You may need to wait longer in case the default occurred on an FHA loan.

As you get the answers to your questions, now, take the required steps and apply for a VA loan to a lender. He or she will not only guide you but also help you get the loan.

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Last modified: September 7, 2020

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