Qualify for VA Home Loans with Bad Credit
Bad credit VA home loans are available to qualified veterans through the Veteran's Administration in order to help them get a home loan in spite of their credit history. Because of their service, bad credit VA home loans assist veterans with down payments, offer lower monthly payments and give more favorable terms than mortgages for civilians with similar credit histories.
Who Qualifies for Bad Credit VA Home Loans?
The bad credit VA home loans program is available to veterans and active members of the Army, Navy, the Marine Corps, and the Air Force. Members of the Coast Guard, the National Guard and the Army Reserves may also qualify under different criteria. The VA program may also be available to certain surviving spouses of deceased service personnel, prisoners of war and those missing in action.
Benefits of a Bad Credit VA Home Loan
There are many ways that bad credit VA home loans are more advantageous than getting a traditional mortgage:
- Lower interest rates - The lender has the security that the federal government is guaranteeing the loan, so bad credit VA home loans usually come with a significantly lower interest rate than traditional mortgages.
- No mortgage insurance - The federal government will guarantee payment to the lender in the event of default or a veteran's failure to repay. As a result, bad credit VA home loans do not requires mortgage insurance, and this can greatly reduce the size of the monthly payment.
- Bad credit does not exclude veterans from the mortgage market - Most lenders look through up to seven years of credit history to determine the terms of the mortgage. With a bad credit VA home loan, creditworthiness is determined by only looking back through the twelve-month period before the loan application is submitted.
Loan Application Process
Bad credit VA home loans are not loans from the federal government, but rather private loans that are guaranteed by the government. The borrower must find an actual lender to write it, but there are many choices for veterans.
Mortgage companies will focus on the borrowing veteran's debt ratio, so veterans with many existing loans, obligations, and credit cards will have difficulty qualifying for a bad credit VA home loan. Interested veterans should typically have only 40 percent of their income, including the anticipated mortgage payment, allocated to their spending needs.
Mortgage companies that specialize in bad credit VA home loans are the easiest option for most veterans, and they can assist those who have served get into the homes more easily.