Home Buying in Denver>Question Details

katrina, Home Buyer in 80112

Is there a lender that will give a VA a loan with a credit score of 600? We have been renting the home we are in for the past 5 years.

Asked by katrina, 80112 Wed Sep 19, 2012

Help the community by answering this question:


Hi Katrina,

Here are some of the current VA guidelines below.

VA Loan Requirements 2012
What are the VA Loan Requirements for 2012? These requirements guide a veteran borrower’s ability to repay the loan as well as the lender’s ability to lend. Whether buying a home or refinancing an existing home you must know the restrictions that will allow you to make better long-term financial decisions.

The focus here is on VA loans as those and FHA loans are the more popular types of mortgage loans today. Everything in the lending industry is about risk assessment.

The Basics
There are 3 key elements to any mortgage transaction.

Credit - Your credit score & history are the driving factor in today's market.
Debt to Income (DTI) - This ratio determines how much of a payment you can afford under the lending guidelines.
Loan to Value (LTV) - This ratio determines how much you borrow against the value of the property.

VA Loan Requirements 2012
The most common of VA loans is the VA 30-year fixed program and here are the minimum requirements to qualify.

VA Certificate of Eligibility
If you have not already acquired your VA Certificate of Eligibility, please order one now or we can order it for you. This document is required for a VA loan.

Credit Score and Established Trade Lines
Credit Score - Veterans Affairs (VA) insures VA loans and does not require a minimum FICO score. However, lenders have their own requirements that are in addition to those of the VA.

Most lenders today require the minimum mid-score in a tri-merge report to be at 620 or better. The credit report must clearly support an applicant’s ability to meet financial obligations in a timely, responsible manner.

Less than a handful of lenders will accept mid-scores down to 580 but you will need to have other compensating factors such as a larger down payment, a good amount of reserves, low DTI, and the loan will require Direct Underwriting (DU) approval or need to be manually underwritten.

Generally, lenders have been increasing their minimum FICO score mortgage requirement and some are now requiring a 640 mid-score as the cut off.

Most lenders have the following credit score guidelines:

620 up to $417,000 and 640 for IRRRL's
720 for $417,000 to $650,000
740 for over $650,000

Established Trade Lines - VA loan requirements allow for both traditional and alternative credit trade lines. However, most lenders require that you must have at least two lines of credit that you have maintained for at least two years.

Alternative lines of credit are defined as continuing obligations, such as cell-phone / home-phone bills, utility bills, rent history, car insurance, which require a periodic payment in order to establish payment history. To be used to establish a minimum payment history, an alternative credit trade line must have existed for at least 12 months.

VA loan requirements do not consider absence of a credit history as an adverse factor. However, a minimum two year history of the applicant, including residence, income, assets and credit must be developed.

To find out more about your credit, you can download a free credit report at any of the three credit bureaus and we could help you review it.


Late Payments, Collections, Bankruptcies, Liens, Judgments, Foreclosures, and Child Support
Late Payments - VA loan requirements does not allow for more than one debt payments being more than 30 days late if the incidents have occurred within the last 12 months. This includes more than one late payment on a single account. In addition, individual lenders may have restrictions on late payments made in the last 12 months.

No mortgage late payments made in the last 12 months are allowed on purchase and refinance of VA loan. And only a 1x30 mortgage late payment is allowed on a VA streamline (IRRRL).

Collections - VA loan requirements specify that most collection accounts outstanding must be paid, no matter what their age as long as they are currently delinquent and/or due and payable.

Isolated collection accounts do not necessarily have to be paid off as a condition for loan approval. For example: a credit report may show numerous satisfactory accounts and one or two unpaid medical (or other) collections. In such instances, while it would be preferable to have collections paid, it would not necessarily be a requirement for loan approval.

Bankruptcies - Chapter 7 must be discharged for at least 2 years with no late payments since the date of discharge.

You can go to this site for more details: http://www.va-loan-requirements.com/

Patrick Murray
HomeSmart Realty Group
(303) 881-1333
0 votes Thank Flag Link Wed Sep 19, 2012

VA loans are not completely credit score driven. A VA lender can give you all of the details as it relates to your personal financial situation. If all of your other credit info and debt to income ratios are in order you should be able to do a VA purchase. Best of success and let me know if I can be of further assistance. Call this lender:

Joe Massey - 303-809-7769
Senior Loan Officer
Castle and Cook Mortgage

Best Regards. Robert...

Robert McGuire ASR
Your Castle Real Estate
Direct - 303-669-1246
0 votes Thank Flag Link Wed Sep 19, 2012
Call a lender who handles VA, typically it should not be a problem.
0 votes Thank Flag Link Wed Sep 19, 2012
try contacting Jim Smithwick @ Coldwell Banker Mortgage he is a vet and does everything in his power to get the deal done. His # is: 303-521-5157. Good luck and if you do get approved and need an agent please contact me: Janie Stoddard@ 303-408-0738. Thank you!
0 votes Thank Flag Link Wed Sep 19, 2012
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