Mortgage Video & Blogging Community

The Veteran’s Administration (VA) does not have a minimum score in order for guarantee of the loan. The mortgage lenders, who are lending the money, are allowed to set their own standards for VA credit score requirements.

In the recent years, eligible veterans and military personnel have enjoyed a simpler mortgage process than was available to many home buyers obtaining conventional loans. Occasionally, a veteran could receive a loan through the VA with a poor credit score and without a down payment.

Changing economic conditions and increased losses due to loan defaults have motivated lenders to limit the availability of such mortgage deals. Since early 2010, most lenders in the U.S. have tightened their lending and credit score requirements, making these loans harder to come by.

As a result, getting a loan without a down payment is more difficult, though one of the few remaining options for 100% financing is a VA loan. Major lending groups have generally resolved to set the minimum credit score requirement at a 620 minimum with many lenders opting for higher minimum scores.

These conditions similarly impact the Streamline Refinance program. Previously, the program let borrowers with a standing VA loan refinance to another VA loan without an appraisal. Although this is no longer the case, it still allows veterans to navigate the process with much less paperwork by streamlining the process.

Most lenders now require borrowers to pay up to $300 or more for their own appraisal, which varies in price depending on the location and value of the home. If the appraisal shows the home value to be less than the VA loan amount, the lenders are likely to decline the application.

There is some good news for those eligible for a VA loan, and the VA lenders who offer them: VA borrowers default significantly less (2.6%) than prime borrowers in general (3.4%).

However, the credit scores of V.A. insured borrowers are generally lower than other prime borrowers, according to the Federal Housing Finance Agency.

All things considered, VA loans remain a great 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 to the VA loans, such as disabled or retired veterans, qualify for exemption from the one-time insurance fee that amounts to about 0.5% – 3.3% of the loan amount, depending on the scenario.

Contact me

Navigating the mortgage approval process doesn’t have to be daunting. With me on your side those hurdles can be overcome. I am available right now to help you with the loan process and know the ins and outs of FHA, VA, USDA and conventional financing. If you want to buy a home using an FHA loan or refinance using VA, I am here to help. Contact me at Alpine Mortgage Planning, 1200 Executive Pkwy., Ste. 100, Eugene OR 97401, 541-342-7576/541-221-3455 cell or by e-mail. Only you can make the choice it is time to get the process started.