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Can you get a VA loan with bad credit?

Loans for military veterans with poor or bad credit

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Can you get a VA loan with bad credit?

VA home loans make buying or refinancing a home more affordable for veterans and active-duty military personnel who qualify. The benefits of VA loans include 0% down payments, competitive interest rates, flexible credit terms, and easier refinancing options.

Freedom Mortgage is the #1 VA Lender1 in the U.S. and our loan advisors can help you understand if you are eligible to buy or refinance a home with poor credit. 

Can you get a VA loan with a bad credit score?

Many lenders require a credit score of at least 620 to finance a home with a VA loan. Freedom Mortgage works with veterans and military personnel who have credit scores of less than 620. For refinancing with the VA IRRRL program, we work with VA homeowners with credit scores below 580. We understand how your credit can suffer during times of service, and we look at the full picture of your finances.

How to get a VA loan with poor credit

Even if you have poor credit, you may still be able to get a VA loan with Freedom Mortgage. We’ll review your credit history and see if you pay your housing costs, credit card bills, and other loans on time each month. Paying your bills regularly for at least the past 12 months helps us determine if you can meet the financial obligations of a new mortgage. 

We look at your income, assets, employment history, and other loan obligations to decide if you qualify. It is possible to get approved for a VA loan after bankruptcy or foreclosure. There are typically more requirements you need to meet, however.

Can you refinance a VA loan with bad credit?

You can often refinance a VA loan with less than perfect credit using a streamline refinance (also known as a “VA IRRRL”). These refinances feature flexible credit requirements, less paperwork, and faster closings compared to other loans. There are eligibility conditions you will need to meet however. For example, you need to be current on your mortgage payments and have a recent history of making your monthly payments on time to qualify for a VA streamline refinance.

Does your credit score affect your VA loan interest rate?

Your credit score can affect the VA loan interest rate you are offered. When you have a lower credit score, you may be offered a higher rate by VA lenders. Similarly, a higher credit score might help you earn a lower rate. VA loans often have competitive interest rates because they are backed by the Department of Veterans Affairs. Ask us what interest rate we may be able to offer you – even if your credit is less than perfect!

Ways to monitor and improve your credit score

  • Check your credit report. You can get a free report on or contact each of the credit bureaus, Experian, Equifax and TransUnion, to receive your information.
  • Look for mistakes. If you find an error in your credit report, work to have it fixed. This can improve your credit score and help you qualify for a VA loan.
  • Don’t max out your credit limits. Pay down as much credit card debt as possible and keep a low debt utilization ratio. This ratio compares how much credit you are using to the amount of credit you have available. For example, if you have a credit card with a $10,000 credit limit and a balance of $2,500, your debt utilization ratio is 25%.
  • Track your bills. Keep a calendar or set up reminders for when bills are due. Paying your bills in full and on time can improve your credit score.

Credit requirements for VA loans versus conventional loans

Veterans can also buy or refinance homes with conventional loans. Conventional loans typically have higher credit score and down payment requirements, however. You will also need to pay for private mortgage insurance (PMI) if you have less than 20% equity in the home while VA loans do not have mortgage insurance. Learn more about conventional loans versus VA loans.

Talk to Freedom Mortgage about VA loan financing with low credit

Freedom Mortgage is happy to work with veterans who have lower credit scores. To speak with one of our loan advisors about buying or refinancing a home with a VA loan, please call 877-220-5533 or Get Started online.

1. Inside Mortgage Finance 2020

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