4 Things You Must Know Before Obtaining a VA Home Loan with Bad Credit

The VA home loan program is a way through which many veterans fulfill their new home dreams. When applying for VA home loan, credit score plays an important role in determining the eligibility of an applicant. The best part about VA loans is that in case you have a bad credit score, it’s not a dead end for you. You can still get a VA loan. Many people have a few common doubts in connection with obtaining a VA home loan with bad credit. In this blog post, we have tried to clarify the doubts that most borrowers have. Read on.

VA home loan

1. Minimum Credit Score

If a veteran fails to repay the loan, the Department of Veterans Affairs looks after the VA loan program and guarantees a portion of a loan. They, however, do not issue a loan and has no minimum credit score requirement. It is the lender who looks after the loan eligibility and approval process. Many lenders have credit score benchmarks and don’t approve VA financing if the applicant doesn’t have the minimum credit score, which is usually 620. A less than stellar credit score, however, doesn’t mean that the applicant won’t get the loan, as some lenders may approve the loan application despite a low credit score.

2. Credit Score and Loan Rate Correlation

A veteran may get a VA loan in spite of a low credit score, but at a higher than usual interest rate. The correlation between credit scores and loans is simple – lower the credit score, higher the loan interest rate. To improve their low credit scores, it is imperative for veterans to know the reason behind it. Before applying for a loan, knowing the reason will help them to take appropriate credit repair measures, which may improve their credit score and get better negotiation on the loan interest rate.

3. Maximum Loan Amount

The maximum value of VA home loan that a lender approves differs from one area to another. Certain places have $400,000 as the maximum loan amount limit. Whereas at other places, the lenders approve loans of up to $600,000. The maximum amount of loan a borrower may get depends on various factors such as the place and area where they are planning to buy a house and their financial profile.

4. Bankruptcy or Foreclosure Conditions

Even if you have bankruptcy or foreclosure in your credit history, VA guarantee on your home loan is possible. The condition for this to happen is that your bankruptcy or foreclosure has to be at least two years old after filing for VA loan. Also, if the bankruptcy is due to circumstances beyond their control, such as medical bills, there will be no negative impact on the borrower’s credit score.


Besides knowing about the listed information, borrowers must also know the VA eligibility criteria, exception, and other such information. Before you apply for a VA home loan, research and understand all the necessary information related to the VA home loans. If you have a bad credit score and wish to obtain a VA home loan, consult a loan advisor as they are experienced and have extensive knowledge about the intricacies of VA home loan.


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