The U.S. Department of Veterans Affairs (VA) is the federal government agency governing VA loans. Per VA credit score guidelines, there is no minimum credit score requirements on VA loans. All government and conventional home mortgage programs have a minimum credit score requirement. The higher the borrower’s credit scores, the lower the layered risk for mortgage lenders.

The lower the risk for lenders, the lower the mortgage rates. Many borrowers often get confused about why they get different credit score requirements on VA loans when they are shopping at various mortgage companies. Some lenders may have a 620 credit score requirement while other lenders may require a 640 FICO. The fact of the matter is the Veterans Administration has no minimum credit score requirements on VA loans.

There Are No Minimum Credit Score Requirements On VA Loans

So why do lenders require certain credit score requirements on VA loans?  This is because lenders can have higher lending requirements called lender overlays on VA loans. What are lender overlays?  All lenders need to have their borrowers the minimum VA Agency Guidelines. VA loans are the best mortgage program in the nation. However, not all borrowers are eligible to qualify for VA loans. Only active and/or retired members of the U.S.

Armed Services with a valid certificate of eligibility are eligible to qualify for VA loans. However, lenders have their own higher lending requirements called lender overlays. Most lenders have higher lending requirements because they want to minimize the credit risks they take on. Most lenders do have lender overlays. However,  Capital Lending Network, Inc. does not have any lender overlays on VA loans. Capital Lending Network, Inc. has zero lender overlays on government and conventional loans. We just go off the automated findings of the automated underwriting system (AUS) and have zero overlays.

VA Credit Score Agency Mortgage Guidelines

The Veterans Administration is the federal agency that is in charge of VA loans. It sets the agency lending guidelines on VA mortgages. VA loans have the most lenient lending guidelines than any other loan program. The federal government has created and launched VA loans many decades ago to reward the men and women who served our country.

Members of the military have always had lower credit profiles than their civilian counterparts. Statistics have always shown military members always had lower credit scores versus civilians because of their constant base transfers and their deployment. Our government kept this data in mind when creating and launching VA Agency Mortgage Guidelines. This is one of the reasons why there are no credit score requirements on VA loans.

What Is The Minimum Credit Score Requirements for VA Loan?

If you’re a veteran or active duty service member, you may be eligible for a VA home loan. But what is the minimum credit score requirements for a VA loan? The answer may surprise you. There is no minimum credit score required for a VA loan. That’s right – you can get a VA loan with no credit score at all! Of course, if you have no credit score, you’ll likely have to pay a higher interest rate.

But the good news is that you can still get a VA loan even if your credit isn’t perfect. So what is the minimum credit score requirements for a VA loan? There isn’t one! You can get a VA loan with no credit score at all. However, the better your credit score, the better interest rate you’ll qualify for. So it’s always worth trying to improve your credit score before applying for a VA loan.

If you’re not sure where to start, check out our guide to improving your credit score. You can also read our guide to the best VA home loans to learn more about getting a VA loan with bad credit.

The Importance Of Getting An Automated Approval

The key to getting an approve/eligible per automated underwriting system is timely payments in the past 12 months. As long as borrowers can get an approve/eligible per automated underwriting system (AUS), there are no minimum credit score requirements on VA loans. This also holds true on the debt-to-income ratio. There is no maximum debt-to-income ratio caps on VA loans as long as borrowers can get an approve/eligible per an automated underwriting system (AUS).

Capital Lending Network, Inc. has helped countless borrowers get approved (approve/eligible per AUS) and closed on their VA loans with credit scores under 600 FICO and debt-to-income ratio over 60% DTI. Capital Lending Network is one of the very few mortgage companies with no lender overlays on VA loans. Capital Lending Network, Inc. has a national reputation of being able to do other lenders cannot due to its no-lender overlays on government and conventional loans.

VA Credit Score Guidelines Versus Lender Overlays

All lenders need to make sure borrowers meet the minimum VA Agency Mortgage Guidelines. However, lenders can have higher lending guidelines that are above and beyond the minimum VA Agency Guidelines which are called lender overlays. Most lenders do have lender overlays. Lenders are allowed to have lender overlays on just about anything. Most lenders do have lender overlays on credit scores. When a lender requires a 620 or 640 credit score on VA loans, the lender has lender overlays on credit scores.

VA Loan Approval With Low Credit Scores: 500 to 620 FICO

Over 40% of our borrowers at Capital Lending Network, Inc. are VA borrowers with under 600 credit scores. VA does not require a minimum credit score requirement on VA loans. For example, if a borrower gets denied by a mortgage lender because they do not have a 640 credit score, the borrower may meet all VA Agency Guidelines and qualify for a VA loan but not qualify for a VA loan with that particular lender.

Not all lenders have the same mortgage guidelines on VA loans. Just because a borrower is told they do not qualify for a VA loan at one lender may not mean they do not qualify for a VA loan at a different lender. Capital Lending Network, Inc. has zero lender overlays on VA loans. As long as you can get an approve/eligible per the automated underwriting system (AUS), you can qualify, get approved, and close on your VA loan at Capital Lending Network, Inc.

Key In Getting An Approve/Eligible Per Automated Underwriting System (AUS)

Getting automated approval per AUS is key to qualifying for a VA loan with lower credit scores. As mentioned in the earlier paragraphs of this article, VA loans do not have a minimum credit score requirement. However, you need an approve/eligible per automated underwriting system. For borrowers who cannot get an approve/eligible per AUS but get a refer/eligible per AUS may become eligible to qualify for VA loans with manual underwriting. However, manual underwriting guidelines apply. On manual underwriting, you need to have timely payments in the past 24 months.

We will discuss manual versus automated underwriting in the next paragraph. You can get an approve/eligible per automated underwriting system (AUS) on VA loans with lower credit scores, outstanding collections/charged-off accounts, and other prior bad credit. However, in order for the automated underwriting system (AUS) to render an approve/eligible, the borrower will need timely payments in the past 12 months.

Late payments in the past 12 months are normally deal killers for borrowers to get an approve/eligible per the automated underwriting system. One or two late payments in the past 12 months is not always a deal killer. However, it will be very difficult to get an approve/eligible per AUS with multiple late payments in the past 12 months on VA loans.

Manual Versus Automated Underwriting System

Borrowers who have a refer versus an approve/eligible per automated underwriting system (AUS) can qualify for a VA loan with manual underwriting. Manual underwriting means the automated underwriting system does not have enough detailed data to render an approve/eligible per AUS but the borrower may be eligible for a VA loan but the file needs to be downgraded to a manual underwrite. Manual underwriting is when the file is carefully reviewed by a human mortgage underwriter.

Manual underwriting guidelines apply. Not all lenders do manual underwriting. However, Capital Lending Network, Inc. are expert in manual underwriting on VA and FHA Loans. VA and FHA loans are the only two mortgage programs that allow manual underwriting.  A large percentage of our borrowers at Capital Lending Network, Inc. are under manual underwriting.