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VA Loan Credit Info

VA LOAN

By Debbie Gregory.

In years past, when a veteran wanted to use the VA home loan benefit, the VA would issue the approval, order the appraisal and set the VA interest rate for the loan.

This time-consuming process was one of the reasons many sellers would refuse an offer on a home if the buyer was using a VA loan for the purchase.

Nowadays, the VA doesn’t approve the loan, but does issue the requirements that lenders must follow if the lender expects to receive the VA loan guarantee. The approval process is completely performed by approved VA lenders.

So exactly what are the credit requirements for a VA loan?

Of course, having good credit is a great start. The Fair Isaac Company (FICO) is the largest and best known of several companies that provide software for calculating a person’s credit score. The company devised a complex analysis of payment patterns to produce a three digit number reflecting a borrower’s credit past as a way to predict the future. This number ranges from 300 to 850 and the higher the number, the better the credit.

Experian, Equifax and Transunion all use the FICO model and report their scores to a VA lender when asked. Although the numbers are rarely the same, they are usually similar to one another.

Most VA lenders require a minimum 640 credit score but others have a 620 rule. That means if your scores are low and the VA lender declines your loan because your score is 635, another VA lender might be able to approve your VA loan.

Bankruptcy & Foreclosure Don’t Necessarily Disqualify You:

While a bankruptcy or foreclosure can stay on your credit report for seven years, you don’t have to wait that long to use your VA home loan benefit. If you have a previous foreclosure, you may qualify if more than two years have passed since the foreclosure date. If you used your VA entitlement and it was involved in the foreclosure, the amount of the entitlement in the foreclosure must be redeemed.

In the case of a bankruptcy, you should begin to repair your credit as soon as possible. If two years have passed since the discharge date and your credit has improved, you can’t afford to have any late payments in those two years. Stay current with your rent, utilities and mobile phone bill. Some VA lenders will use these payments as evidence of “alternative” credit.

Military Connection salutes and proudly serves veterans and service members in the Army, Navy, Air Force, Marines, Coast Guard, Guard and Reserve,  and their families.

Military Connection: More Veterans Owning Homes: By Debbie Gregory

Veteran homeownersOver the last few years, the Department of Veterans Affairs (VA) Home Loan Program has gained significant market share, compared to competing private and government mortgage options. One of the main reasons for this is that big banks and mortgage companies have increased efforts to help returning Veterans become homeowners.

The VA Home Loan Program is now at record highs, having more than doubled since 2007. Back in 2011, VA guaranteed home loans made up only 3% of mortgages in the country. In Fiscal Year 2014, VA guaranteed home loans jumped to around 7%.

There are many reasons why VA loans are rapidly increasing. First and foremost, there is a large demand for homes among the Veteran community. With the number of Iraq and Afghanistan Veterans separating from the service, there is an influx of families, relocating and looking for homes. In total, the VA estimates that there are more than 22 million Veterans from all generations, across the country. The majority of these Veterans will qualify for VA loans. And with today’s economy, the only way that some Veterans will get approved for a home loan is through the VA.

Here’s how the process works, in a nutshell: A Veterans applies for a certificate of eligibility from the VA. The VA reviews the Veteran’s credit, earning potential, etc. and then approves or disapproves the Veteran. Veterans with a certificate of eligibility are then free to seek out private lenders vetted with the VA.  The lenders provide the loans to the Veteran, with the VA’s guarantee that if the Veteran is unable to pay the loan, the lender will still be paid back.

Lenders recognize VA loans as good business. And VA guaranteed loans come with zero down payment and generous finance rates that make home ownership more affordable for the men, women and families who have made sacrifices in service to their country.

There are also scores of non-profits that partner with large corporations and lenders to help Veterans become homeowners. Organizations such as Habitat for Humanity, Homes for Heroes, the Military Warriors Support Foundation, HomeStrong USA, Operation Homefront, and Purple Heart Homes have gifted hundreds of homes to Veterans.  Many of these houses were acquired through donations from major lenders, including Bank of America, JPMorgan Chase, SunTrust Mortgage, Wells Fargo, and U.S. Bank.

Considering the struggles many Veterans face in light of the current economy,  it’s satisfying to see so many Veterans and military families are able to fulfill their dream of owning their own home. It’s the very least a grateful nation can provide for as a way to say thank you for the sacrifices they have made.

Military Connection proudly serves those who serve in the Army, Navy, Air Force, Marines, Coast Guard, Guard and Reserve, Veterans and their Families. We are the go to site for Veteran Employment and information on Veteran education. Militaryconnection.com provides Veterans with and Directory of Employers, a Job Board, information on the Post-9/11 GI Bill, and a blog that offers Veterans boundless information. Be sure to visit Militaryconnection.com, the go to site.

Military Connection: More Veterans Owning Homes: By Debbie Gregory