Routing # 256078446
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Can I Get a VA Loan With Bad Credit?
EXPECTED READ TIME: 4 MINUTES
April 30, 2021
Are you considering a VA home loan and worried about your credit? That's more common than you may think. Here are three of the top questions borrowers ask us every day: What is a good credit score for a VA loan? What is a good credit score for a home loan? Can I get a VA loan with bad credit? We'll answer those questions and tell you what to do if your credit isn’t the best. And most importantly, you'll learn what credit score you'll need with PenFed for a VA mortgage.
If you’ve made some credit mistakes over the years or have a shorter credit history, you may not have stellar credit. If at all possible, before you try to buy a home, it’s a good idea to do whatever you can to improve your credit. However, if you’re short on time and have bad credit, it’s essential to know what might be doable.
Here are six steps you can take to improve your credit:
- Pay all your bills on time.
- Get a free copy of your credit report.
- Request the credit bureaus to fix any errors.
- Pay off any debts if possible (but don’t close your accounts).
- Don’t apply for any credit and don’t buy anything on credit.
- Apply as soon as your score is close to 620.
What is a good credit score for a VA loan?
Let’s go over some basics. Credit scores range from 300 to 850. To get a VA loan with PenFed, your score needs to be 620.
There are hundreds of different credit scoring models. The two most popular are:
- FICO®: 90% of mortgage lenders use FICO® for their credit reporting.
- VantageScore®: Credit Karma uses this and it’s another credit scoring model from Equifax, Experian, and TransUnion.
There are other scoring models for specific industries. For example, TransUnion offers CreditVision for car dealers.
Each credit scoring model has a range. It ranks whether your credit score is very poor, poor, fair, good, very good, or excellent. Here is an example of what a “bad” or poor credit score would be based on a FICO Score:
|
Score Range |
Description |
|
Less than 580 |
Poor: Well below the average U.S. score, so lenders may see you as a risky borrower. |
|
580–669 |
Fair: Below average compared to other U.S. consumers, some lenders will approve you, though you may need to be near the higher end of this range for approval. |
|
670–739 |
Good: Near or slightly above average and most lenders will approve you with this score. |
|
740–799 |
Very Good: Above average compared to other U.S. consumers; many lenders will see you as a reliable borrower. |
|
800+ |
Exceptional: Well above the average U.S. consumer's credit score, many lenders will approve you with the best interest rates and terms. |
What is a good credit score for a VA loan?
The VA doesn’t have a minimum credit score requirement — but the lenders who offer VA loans do.
You can sometimes get approved for a VA loan with bad credit, yet with many lenders —you will need a credit score of 650 or higher. At PenFed, we only require a score of 620.
If you think your score is close to 620 and you’re looking to buy a home — you should apply right away. The mortgage professionals at PenFed will work with you to get the VA loan preapproval you need so you can start home shopping.
What is a good credit score for a home loan?
And if you’re wondering what a good credit score for a home loan other than a VA —with PenFed, it’s still 620. Although, with a conventional loan, the interest rates won’t be as low as a VA loan. If your score is below 700, your interest rate will be higher.
How to Apply for a VA Home Loan
A VA home loan is one option for different types of mortgages available for service members, veterans, and surviving spouses. You can learn about all of your options by contacting our PenFed team or applying for preapproval.
To learn more about PenFed mortgages or what option is right for you:
SIMILAR ARTICLES
How Much Credit Card Debt Is OK When Buying a Home?
How much credit card debt is OK to have when buying a home? PenFed Credit Union explains what you need to know about credit card debt and getting a mortgage.
Understanding Your Credit Score for a VA Loan
What are the credit scores needed for a VA loan? Can I get a VA loan with poor credit? Is a VA loan better if I have bad credit? PenFed has all the answers.
All About VA Loans and Your Credit
Learn how your credit affects getting a VA mortgage. PenFed Credit Union answers what credit score is good for a VA loan.
Everything You Need to Know About VA Loan Rates
Questions about VA loan rates? Let the experts at PenFed help. In this blog, you'll learn who sets VA rates and how VA loan rates compare.
Home Buying Steps
Mortgage Products
Disclosures
1Conventional Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.0 discount point, which equals 1.0 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 75%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
2FHA Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.0 discount point, which equals 1.0 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 96.5%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
3VA Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.125 discount point, which equals 1.125 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $450,000; loan-to-value ratio of 95%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of $995.
4Jumbo Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 0.625 discount point, which equals 0.625 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, non-conforming, fixed-rate loan. Loan amount of $1,009,000; loan-to-value ratio of 70%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
Fixed Rate Advance Lock-In You may lock in an Annual Percentage Rate for Advances during the Advance Period. During your Advance Period, you may choose to have three separate Fixed Rate Advances locked in at any one time, with a maximum of two new Fixed Rate Advances per calendar year. Each Fixed Rate Advance must equal or exceed Ten Thousand Dollars ($10,000.00) and you may not request a Fixed Rate Advance that would cause the amount you owe to exceed your Credit Limit. The only term option for your Fixed Rate Advance is 240 months (“Fixed Rate Advance Term”). However, the term of your Fixed Rate Advance cannot exceed your Repayment Period.
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