VA Loan Credit Score Requirements in 2013
For military personnel stationed in Louisiana or any other qualifying veteran, your VA home loan eligibility is an amazing benefit you should be using! VA offers the best financing option along with the lowest interest rates whether you’re a first time homebuyer or a homebuyer looking to use your VA eligibility once again.
If you’re concerned about past credit issues and whether or not you will qualify based on VA credit score requirements, let me first tell you to breathe a sigh of relief. VA is very lenient when it comes to your past credit history and offers far more flexibility in regards to a previous bankruptcy or foreclosure.
While VA does not have a minimum credit score requirement, most lenders are able to set their own individual guidelines for VA loan requirements. Consequently, you will find that most major banks or lending institutions have set the minimum credit score requirement at 620.
In the last several years eligible veterans and military personnel have enjoyed an easier mortgage process than what was available to many home buyers attaining conventional or FHA loans. Unfortunately, the meltdown within the mortgage industry coupled with increased losses due to loan defaults has prompted lenders to make this process a bit more complex. Since early 2010, many lenders in the U.S. have tightened their lending and credit score requirements, making VA loans harder to qualify for.
These requirements have also impacted the VA Streamline Refinance program. Previously, borrowers who already had a VA loan were able to refinance into another VA loan without an appraisal. Although this is no longer the case, it still allows veterans to take advantage of lower interest rates while providing significantly less paperwork to the lender.
VA loans are one of the last remaining 100% mortgage financing options. The good news in that is this: VA borrowers default significantly less (2.6%) than borrowers in general (3.4%).
Even so, according to the Federal Housing Finance Agency, the credit scores of VA insured borrowers are generally lower than other borrowers.
All things considered, VA loans remain a terrific opportunity. Veterans and active duty military personnel who qualify can often secure a low mortgage rate and meet the VA loan requirements even if their credit score is less than perfect. In addition, about 25% of applicants such as disabled or retired veterans qualify for an exemption from the funding fee or what is considered a one-time insurance fee. That fee can really add up when you multiply the 0.5% – 3.3% by the loan amount.