“If I am a veteran with some credit problems, can I still get a VA home loan?”
You are a veteran ready to purchase a home, but you have pre-existing credit issues...can you get a VA mortgage?
Maybe. When it comes to your VA Home Loan, your approved mortgage lender will make every effort to get you a VA new home loan. They'll take everything about your credit history and your current financial status into account.
First, the lender will analyze your past credit performance. If you've made timely payments for the last 12 months, this may be enough to demonstrate your responsibility to repay your VA new home loan.
But even if you have some credit issues, you may still qualify for a VA new home loan
A period of financial difficulty does not disqualify a veteran if a good payment pattern has been maintained since then. Satisfactory credit is generally considered to be re-established after you or you and your spouse have made on-time and complete payments for 12 months after the date of the last negative credit item(s). It's your overall pattern of credit behavior, your commitment to making your payments rather than isolated cases of slow payments, that are most important.
What if you're just starting out and have no credit history? Lack of an established credit history should not be a deterrent to your VA new home loan approval. Good payment history on items such as rent, utilities, phone bills, etc., may establish the good credit history you need to qualify.
What if you've declared bankruptcy?
The VA guidelines state that a minimum of two years must elapse since the discharge date of the veteran borrower and/or spouse's Chapter 7 bankruptcy. A full explanation of the bankruptcy will be required. You must also have re-established good credit, qualify financially and have job stability.
The VA will consider a borrower still paying on a Chapter 13 Bankruptcy if the payments to the court have been satisfactorily made and verified for a period of one year. Court trustee will need to give written approval to proceed. A full explanation of the bankruptcy will be required. You must also have re-established good credit, qualify financially and have job stability.
If you have any collections, judgments or federal debts pending, you may have to answer for those. If a collection is minor in nature, it usually does not need to be paid off as a condition for VA new home loan approval; but judgments must be paid in full prior to closing. Veteran-borrowers can't be delinquent on a federal debt, including tax liens, student loans, etc. Best to bring all debts up to date to support an approval of a VA new home loan approval.
Do you have any foreclosures on your record? A veteran borrower with a previous foreclosure or deed-in-lieu of foreclosure within the prior two years is generally not eligible for a VA home mortgage.
If a veteran, or veteran and spouse, have prior adverse credit and are participating in a Consumer Credit Counseling Plan, the VA may consider you to be working on it, and deem that you are thus a satisfactory credit risk - once you demonstrate 12 months' satisfactory payments and the counseling agency approves the new credit.
So - credit is never damaged beyond repair. Work with the proper agencies to get your credit history cleaned up and ready for inspection.
