va loan requirements fico score

VA Loans

VA Loan Requirements: Why Your FICO Score Matters

Low credit scores are a major problem for Americans. In fact, an estimated 68 million people have scores below 610. This makes it almost impossible to qualify for a traditional mortgage. Most mortgages prefer borrowers to have scores over 620 to qualify for a loan in the first place. VA loan requirements are much more relaxed. You’re able to buy a house even if your credit score isn’t great. However, your FICO score can still influence your ability to get a loan. Here’s why it’s important to keep your score as high as possible.

Lenders Set the Requirements

The VA doesn’t determine the terms for your loan. They just guarantee it. This means if you default, the VA pays the lender a portion of the loan’s value to settle your debt. It’s up to the lender to set certain VA loan requirements. If they determine that your credit score is too low, they’re not required to issue you a loan. You’ll have to search for a different lender that’s willing to work with your credit score.

The Higher the Score, the Lower Your Interest Payments

Lenders will almost always look at your credit score to decide how risky you are as a borrower. When your score is high (above 680), you likely have a history of paying your bills on time. This means you’re more likely to repay your loan in full which makes you an ideal borrower. They’ll reward your high credit score with low interest rates on the loan. This makes your monthly payments smaller for the life of your mortgage. If you have bad credit, you’ll end up getting a higher interest rate even if you satisfy all other VA loan requirements.

The Best Thing to Do Is Raise Your Score

Ultimately, interest rates can make a loan affordable or expensive. The best way to hedge against those high costs is to raise your score as much as you can before you buy a house. Start by paying down existing debts. Avoid taking out new loans or opening new credit cards until you get your mortgage. This will make it easier to qualify for the fairest loan terms possible.

Get Help Today

If you’re sure you meet the VA loan requirements and are confident that your credit is in good shape, don’t wait. Reach out to our team to discuss your loan options or apply online for your VA home loan today.