There are lots of benefits that come with VA loans, especially if you have full entitlement — no down payment, no mortgage insurance, and no loan limits for qualifying veterans, just to name a few.
There’s also no minimum VA home loan credit score set by the U.S. Department of Veterans Affairs (VA), which insures VA mortgages.
The private lenders who loan those mortgages, on the other hand, do set minimums. But these can vary significantly from one company to the next.
This guide will break down the general score requirements and how you can increase your chances of qualifying for this 0% down loan program.
What's in this Article?
What is the minimum credit score for a VA home loan?
The VA doesn’t set a minimum credit score requirement for VA loans, so it’s up to private lenders to determine their own. These vary by mortgage company, but many require between a 580 to 620 minimum.
But because the VA doesn’t issue a requirement, lenders have some autonomy when making loan decisions.
The VA encourages lenders “to make VA loans to all qualified veterans who apply.” That means the underwriting department decides whether a veteran is creditworthy based on several factors, not just their credit score.
For instance, one applicant might have had a one-time medical event which is now resolved in which he missed payments. His score is 620. Another applicant demonstrates ongoing disregard for credit obligations, but has a 640 score. The applicant with a 620 score might have a more favorable underwriting result and approval versus the scenario of the applicant with the 640 credit score.
Lenders look at things like your payment history, income, assets, and debts. So even if your score is on the low end, your chances of approval may be higher than you think.
My credit score is pretty low, and I have a rocky credit history. What do I do?
Apply anyway. Again, private lenders can use their discretion when it comes to approving VA loans. Your score might be low, but your income and savings could make up for it.
Best-case scenario, you’ll qualify for the loan and can start shopping for a house!
But even if you don’t qualify this time, your loan professional can offer guidance on how to better your chances down the road.
They may also be able to refer you to a credit counselor who can help you get your finances on track. Then you’ll be in a stronger position to buy a house the next time you apply.
Write a letter of explanation (LOE)
Maybe you’re worried about late payments, foreclosures, or bankruptcies on your credit history. It’s still worth applying.
Depending how long ago those events occurred, the loan officer may simply ask for a letter of explanation. That’s your chance to explain the circumstances surrounding those issues and why they’re unlikely to happen again.
If those events were more recent, some lenders may want to see a longer period of on-time payments and strong credit habits before they approve you.
But again, different private lenders have different requirements. Some may work often with veterans recovering from bankruptcy or foreclosure, and they may have loan options that suit your circumstances.
The bottom line: If homeownership is your goal, a low credit score won’t necessarily stand in your way.
VA home loan credit score hack: Make a down payment
When you apply for a VA loan, the loan officer puts your application through a computerized system that analyzes all your financial indicators — not just credit score.
One factor the system puts a lot of weight on? That’d be the down payment.
It’s true: The VA approval system really likes down payments. And while VA loans don’t technically have a down payment requirement per se, the system favors applicants who make a voluntary one — even if it’s just a mere 1 or 2%.
How can I raise my credit score quickly?
Making a few key changes to your credit profile can help raise your score quickly. If you need to raise your score really quickly — like, within a few days quickly — you can talk to your lender about doing a “rapid rescore.”
About “rapid rescores”
Usually, when you pay off a credit card or loan, your credit score updates within a few weeks. That’s time you may not have if you’ve found the perfect house and want to put in an offer right away.
A rapid rescore allows you to submit the new information to the three major credit bureaus — Experian, TransUnion, and Equifax — and have them recalculate your score in a matter of days.
The rapid rescore may move you into a qualifying range if you make changes substantial enough to spur a significant increase, such as:
- Paying down total credit card balances to less than 30% of your available credit
- Proving a late payment was actually paid on time
- Proving a judgment, lien, or another derogatory account is not yours
Your lender can help you through the rapid rescore process, so you don’t need to figure it out alone.
Note, however, that a rapid rescore can cost up to a few hundred dollars, and you’ll have to pay that out of pocket before the loan moves forward and the score increase is not guaranteed by the actions completed. There are score simulators the lender will have access to that provide the estimated score increase, but the actual increase is not known until the rescore is completed.
Other ways to address low credit scores
If you’re more patient, or you can wait a few months before you start looking for a home, you can take the longer-term strategy to raising your credit score:
- Pay your bills on time. Payment history accounts for the largest portion of your score (35%), so making on-time payments every month can really give it a lift. You might consider setting up autopay on your accounts, if possible.
- Pay down debts. Your balances make up the second-biggest chunk of your score at 30%. Lowering these can raise your score, too.
- Consolidate high-interest debt. Rolling all your balances into a low-interest loan or zero-interest credit card can help you save on interest and pay off your debts faster. The fewer high-balance debts you have, the better your score will be.
- Start a side hustle. Driving for Uber, running errands on Favor, or starting up your own Etsy shop can all give you some extra income, with which you can pay down your debts and improve your credit score.
- Stick to a budget. A monthly budget helps you live within your means and avoid relying on credit cards and loans. Tracking your income and expenses can also help you identify new ways to save — which is great, because you’ll want some extra money on hand to furnish that new home once you’re ready to buy.
These are solid ways to improve your score, but it may take a few months before you see a significant boost in your score.
The upside is that paying bills on time, sticking to a budget, and avoiding high debt balances can help you qualify for a mortgage and develop lifelong habits that allow you to achieve and maintain good credit.
Here’s another benefit of improving your credit score: As you pay down credit card and loan balances, your debt-to-income ratio (DTI) will improve. Since DTI is another factor lenders use to evaluate your loan application, this is yet another step toward qualifying.
VA home loan credit score FAQs
Most lenders require at least a 580, but there may be some mortgage companies that allow for lower credit scores on VA loans. Because private mortgage lenders have some flexibility with their VA home loan credit score standards, it’s important to shop around and compare your options. Where one lender might deny your application, another might approve you.
The VA doesn’t set a minimum VA home loan credit score. Instead, it asks that lenders consider an applicant’s full financial profile, including things like income, debts, payment history, and more. If you don’t have a credit score, these factors will play a significant role in your eligibility.
You’ll need to meet certain military service requirements to be eligible for a VA loan. You will also need to meet certain credit score, income, and debt-to-income ratio requirements.
If you’re interested in buying a home with a VA loan, it’s a good idea to talk with a loan officer at a VA-approved private lender. They can look up your certificate of eligibility (COE), which shows your service eligibility, and they can help you through the mortgage preapproval process.
You may be denied for a VA loan if you don’t meet the minimum military service requirements, you were dishonorably discharged, or you don’t meet your lender’s financial requirements for taking out a mortgage.
I want to apply. What do I do next?
The VA loan program is meant to help qualifying veterans, active-duty servicemembers, and eligible surviving spouses become homeowners. That includes those with lower credit scores.
Whatever your current credit score is, applying for preapproval with a VA lender will tell you how much you can borrow and the next best steps toward buying your home.
A down payment is required if the borrower does not have full VA entitlement or when the loan amount exceeds the VA county limits. VA loans subject to individual VA Entitlement amounts and eligibility, qualifying factors such as income and credit guidelines, and property limits. Fairway is not affiliated with any government agencies. These materials are not from VA, HUD or FHA, and were not approved by VA, HUD or FHA, or any other government agency.
Some references sourced within this article have not been prepared by Fairway and are distributed for educational purposes only. The information is not guaranteed to be accurate and may not entirely represent the opinions of Fairway.