Credit Scores and VA Loans
December 08, 2019
The VA Loan is part of what is known as the GI Bill of Rights and provides veterans with the ability to purchase a home without any down payment required.

Minimum Credit Score For VA Loan

The minimum credit score for a VA loan is going to be around a 580.  

Yes, a 580 credit score can get you a VA loan; however, it is going to depend on a few factors: 

The debt-to-income ratio allowed for a VA loan is 41%, and is used to determine if you can even qualify for a VA loan.

This ratio is calculated by determining the percentage of your gross monthly income that goes toward your regular monthly debt payments.

The lower this ratio is, the better your chances are for getting approved for a loan.

For example: 

Say you have a monthly income of $6,000 and all your monthly debt payments add up to $2,000.  In this case, you have a debt-to-income ratio of 33%.

($2,000 is 33% of $6,000)

In this case, even if you have a low credit score like 580, you may be able to qualify for a VA loan due to your low debt-to-income ratio.

Other factors exist such as the number of credit lines you have open, your down payment, and employment history, so it is best to use our rate checker below for an accurate rate. (Click to get exact rates)

Best VA Loan Rates for 600 - 620 Credit Score

Usually rates only change with a 20+ point change in your credit score.

For example, a score from 600-620 will qualify for the same rate, but a score from 621 to 640 will put you at a lower interest rate.

With a credit score between 600 to 620 you will probably have the second highest interest rate for your VA backed loan.

Credit scores like a 605, 610 or 615 are well below the national average score of 699. 

Since your interest rate is higher, your loan will be higher on a month to month basis and this can affect your debt to income ratio when it is being used to calculate your eligibility.

According to loan officer William Caballero, "The VA limits the amount of discount points one can buy on a VA loan. Most of the time the investment isn't worth the savings." 

Since this is the case, you probably would want to invest in getting your credit score higher and not worry about paying down any type of points on the loan.

Your income and employment are going to be important factors because a low credit score is seen as a negative in the eye of any lender. 

Note: If your score is low because you have no credit, you will still be looking at the same interest rates. If you were to take your score from the low 600's to a 620, you would be saving an extra $31,348 in payments!

Best VA Loan Rates for 621 - 640 Credit Score

When you reach credit scores like 623, 630, and even 635, you are eligible for a lower set of loan rates.

You still don't have that 699 credit score which is the national average, but you will have a bit more wiggle room in the area of your debt-to-income ratio.

With a credit score around a 625, your employment history will be important. 

You might have some things on your credit that will need to be paid to zero before you can qualify for your loan such as charge offs. 

Most lenders don't want to see that you have unpaid collections on your credit report and will require you to pay them down before the loan can be approved.


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