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VA Loan Credit Score Questions

By
Mortgage and Lending with www.OneTimeClose.com

In a recent online “town hall meeting” conducted via Twitter, the Department of Veterans Affairs answered reader questions about VA home loans across a variety of topics. One that came up was a question about VA loan credit scores.

One Twitter subscriber asked the VA moderator if a credit score of 550 could qualify for a VA guaranteed mortgage.

The VA official site moderator of the chat replied, ” VA does not have a min credit score req, but some lenders might. Suggest you talk to a couple lenders for details.”

This might sound contradictory to some–especially anyone who has been turned down for a VA home loan. How can a borrower get turned down for a VA loan due to credit score issues when the VA doesn’t have any credit score minimum?

It’s true that the Department of Veterans Affairs does not establish a minimum FICO score–unlike conventional loans and FHA mortgages. But the VA does not require the lender to do anything less than it does for any other home loan (with regard to FICO scores) for loan approval.

The borrower must meet the financial institution’s minimum FICO score requirements. VA does require the borrower to have a record of reliable payments on bills and other obligations, but it’s the bank that sets the FICO score standards.

Any borrower with a credit score below 620 may find it difficult to get VA loan approval with most lenders. That is not necessarily a minimum score–some banks require higher FICO scores for the best rates and terms.

But there are ways to improve your credit score–contact the Department of Veterans Affairs to learn about pre-purchase counseling that might be available to you through a local government-approved agency. (You may get a referral to a Fannie Mae or FHA approved credit counselor in your area or be given instructions on how to find them.)

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