Securing VA Home Loans with Bad Credit: Tips for Getting Approved and Qualifying
For ex-servicemen, the challenge of adjusting to civilian life can be quite acute. It is common to see people who have left the military either because their tour is over, they have suffered a disability or they have simply decided to retire, to fight. But when you’re buying a home, having bad credit VA home loans means there’s an affordable financing option.
The military holds a special place in the lending industry, with a variety of incentives offered to current and former members seeking loans for any reason. But securing VA mortgage approval depends on more than just membership.
So what are the criteria needed to secure VA home loan approval? What can you do to increase your chances and where can you get them? Here are some factors that answer these questions.
Qualify for VA funding
Those eligible for VA funding are former military personnel. But that doesn’t mean any ex-member will get the green light. Securing a bad credit VA home loan comes down to meeting 3 key conditions.
Since those seeking VA mortgage approval often have non-military income, there’s every chance they’ve had some bad financial experiences. The VA wants to be sure they are not maintaining a large financial risk.
As a result, applicants cannot have a loan arrears in the previous year, cannot have registered bankruptcies in the previous 2 years and must have proof of paid employment. Once these criteria are satisfied, then a VA home loan is on the cards.
Other considerations
The definition of ex-military is not as clear cut as it seems, with those unable to serve due to disability being included in the group – at least by the VA. As a result, individuals with disabilities or those receiving benefits can apply for a VA home loan with bad credit.
Just like with any other loan, taking steps to improve your credit score (even slightly) can make a huge difference in your chances of getting approved for a VA mortgage. The best way to do this is to clear some existing debt or at least keep up with your credit card and other bills. It may be worth taking out small personal loans to deal with individual debts.
The benefit of seeking a VA home loan is that with each debt that is paid off, the credit score increases and the debt-to-income ratio improves. The ratio is the key factor in any loan application. Get this right and approval is almost guaranteed.
Where to Get a VA Home Loan
Despite the title of the loan product, the VA Home Loan is not actually originated by the VA. They only offer their support to the applicant, while the mortgage provider actually provides the financing. For this reason, it is necessary to find the right online lender to get the best possible terms.
However, the fact that the VA is willing to sponsor the applicant means that the guaranteed terms can be very good, not least because the interest rates are lower. But getting a VA home loan with bad credit usually means no down payment is required, and the VA also guarantees 25% of the mortgage.
With a reduced level of risk, lenders are happy to grant the mortgage. However, look for VA certified home loan providers. These are trusted VA partners that reduce your risk of being taken advantage of and offer a higher likelihood of VA mortgage approval.
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