Securing VA Home Loans With Bad Credit: Tips for Approval and Qualification
For former members of the military, the challenge of adjusting to civilian life can be quite acute. It is common to see those who have left the army, either because they finished their tour, suffered disabilities or simply decided to retire, to fight. But when buying a home, the availability of bad credit VA home loans means there is a financing option available to them.
The military holds a special place in the credit industry, with a variety of incentives offered to introduce and train members seeking loan funds for any reason. But getting your mortgage approved by the VA depends on more than just membership.
So what are the criteria needed to secure approval for a VA home loan? What can be done to increase your chances and where can you secure it from? Here are some factors that address those questions.
Qualification for VA financing
Those who qualify for VA funding are former members of the military. But that doesn’t mean that any former member will get the green light. Securing a VA home loan with bad credit comes down to meeting 3 key conditions.
Because those seeking VA mortgage approval often have income that is unrelated to the military, there is a chance they have had some bad financial experiences. The VA wants to make sure that you are not taking a significant financial risk.
As a result, applicants cannot have defaulted on a loan in the previous year, cannot have bankruptcies filed within the previous 2 years, and must have proof of gainful employment. Once these criteria are met, then a VA home loan is up for grabs.
The definition of ex-military is not as clear cut as it sounds, with those unable to serve due to a disability included in the group, at least by the VA. As a result, people currently disabled or receiving benefits can apply for a VA home loan with bad credit.
As with any other loan, taking steps to improve your credit score (even marginally) can make a big difference in your chances of getting your mortgage approved by VA. The best way to do this is to pay off some existing debts, or at least keep up with credit cards and other bills. It may be worth applying for small personal loans to deal with individual debts.
The advantage of shopping for a VA home loan is that with every debt that is paid off, the credit score increases and the debt-to-income ratio improves. Relationship is the key factor in any loan application. Get it right and approval is almost guaranteed.
Where to get a VA home loan
Despite the title of the credit product, the VA does not make a VA home loan. They only offer their endorsement to the applicant, while the mortgage provider actually provides the funds. For this reason, it is necessary to find a suitable online lender to get the best possible terms.
However, the fact that VA is willing to sponsor the applicant means that the secured terms can be very good, especially since the interest rates are lower. But getting a VA home loan with bad credit generally means no down payment is needed, and the VA also guarantees 25% of the mortgage.
With a reduced level of risk, the lenders are happy to grant the mortgage. Still, look for VA-certified home loan providers. These are trusted VA partners, reducing the risk of being taken advantage of and offering a greater chance of VA mortgage approval.