I need a VA approved lender that will work with a bad credit score.

9 Replies

My fiance and I are looking to buy our first home. Neither of us have good credit. She is a veteran so we're thinking a VA loan would be the best route to take to get financing. We live in the Richmond Virginia area and we are seeking a lender that will approve sub standard credit. Any information or references would be extremely helpful. Thanks.

The VA sets minimum credit standards for loans, not the individual lenders. Focus on improving your credit.

Do you know what your credit scores are?

What type of credit issues do you have? BK, foreclosure, short sale, liens?

Try renting for two years and work on improving your credit. You'll have to meet the VA's minimum credit standards. I recommend Total Money Makeover by Dave Ramsey and consider taking his class Financial Peace University.

Try Federal Savings Bank.

If you haven't already, consider looking into whether or not your fiancé would have been covered under the Servicemember's Civil Relief Act (SCRA) https://www.dmdc.osd.mil/appj/scra/

In certain instances, things like high interest credit cards and certain loans would be capped at 6% APR, with any overages/fees being FORGIVEN and not just deferred. This would have to be retroactive to the date of her Active Duty enlistment (or orders if guard/reserve) and apply up to 6mo after her Date of Separation.

It can be a long hard road, but well worth it.  In any case, good luck to both of you.  I hope to see a success story from you in the near future!

If you have no lates in the last 12 months and re-established credit meaning you have atleast 3 tradelines you have made ontime payments on for the last 12-24 months you may be eligible for VA financing with 580 min or lower scores depending on the scenario.

Most of the time these type of files with be a total cluster and require 30-40 conditions ranging from letters of explanation, additional documentation, and or other to close.

Originally posted by @Robert Sepulveda :

Do you know what your credit scores are?

What type of credit issues do you have? BK, foreclosure, short sale, liens?

 580 buyer/veteran.  480 co buyer/non veteran. No bankruptcies or foreclosures. Mainly unpaid collections and a few liens.  Some will be cleared up within 90 days. 

The VA does not have a credit score minimum. The lender will evaluate your credit history.

Originally posted by @Maurice Bey :
Originally posted by @Robert Sepulveda:

Do you know what your credit scores are?

What type of credit issues do you have? BK, foreclosure, short sale, liens?

 580 buyer/veteran.  480 co buyer/non veteran. No bankruptcies or foreclosures. Mainly unpaid collections and a few liens.  Some will be cleared up within 90 days. 

 Hey Maurice, 

You should ideally work on cleaning up your credit to get the best possible rate, which it sounds like your doing. You might want to do a little research on what are called pay for delete arrangements depending on how old your collection accounts are. You essentially agree to pay the collection agency a negotiated sum in return for their agreement to delete any and all record of the account. If you have multiple collections resolving even a few small accounts can bump your credit score considerably, and is the best short term way to improve your credit score, in my opinion. I would also research closing cost and down payment assistance options, the more equity in the house you want to purchase, the more likely the bank is to approve you. Most states have programs for around 4% of contract price, and I believe that there are similar programs for veterans. 

Adam

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