Shirley's San Antonio Real Estate Blog

Minimum Credit Standards for VA Financing

 

While the Veterans' Administration does not set a minimum credit score standard for VA Home Loans, the mortgage industry does.  In the wake of the subprime meltdown, many of the secondary market mortgage investors (companies that buy bundles of mortgages) have tightened credit criteria. 

 

The minimum credit standard for lending on VA Home Mortgages is set at a minimum credit score of 580.  Credit Rescoring products are available to permanently increase credit scores.  Ask your Loan Originator for more information.

 

Other criteria than just credit score are also considered in underwriting.  A minimum of no more than 1 late on any credit, revolving debt and installment debt, including mortgages, is allowable according to most guidelines.

 

A Bankruptcy does not necessarily preclude VA Home Mortgage financing.  In the case of a Chapter 7 Bankruptcy, a minimum of 1 year from discharge must elapse.  However, cases with less than 2 years from discharge require the presence of an extenuating circumstance, such as loss of job due to medical reasons, for example.  A Chapter 13 bankruptcy is allowable as long as 1 year from filing has elapsed and all payments have been made on a timely basis to the bankruptcy trustee. 

 

Of lesser importance are medical bills, generally considered to be outside of the borrower's ability to control, and having far less negative impact on overall credit underwriting. In some cases, when medical bills are large, they may be required to be paid off with the proceeds of the loan.