Bad credit happens to the best of us. Sometimes, unexpected events take place like a job loss or sudden medical expenses, and, as a result, your credit suffers. The good news is bad credit doesn’t have to stop you from pursuing your dream of homeownership. VA mortgage loans can be an excellent option for military borrowers with bad credit. Below, we’ve discussed the benefits in detail.
Benefits of VA Loans for Military Borrowers with Bad Credit
Bad credit can sometimes make it difficult for borrowers to pursue traditional financing options like conventional loans. However, the good news is, there are other loan programs that can be a good option for those with less-than-ideal credit. If you’re actively serving in the U.S. military or have formerly served, you may be eligible for a VA home loan. Here are some of the benefits of VA mortgage loans for military borrowers with bad credit:
Relaxed Credit Score Requirements
If you have bad credit, you’ll be happy to know that the VA does not set credit score requirements for VA home loans. However, most lenders do. The good news is lenders tend to be more lenient when it comes to VA loans because the federal government insures them. Some may be willing to accept borrowers with credit scores as low as 580. This is a big difference from conventional loans, which usually require a credit score of at least 620.
Conventional mortgages typically require a debt-to-income ratio of less than 36%. However, when it comes to VA mortgage loans, requirements are more relaxed. Borrowers may be able to qualify with a debt-to-income ratio as high as 41%.
No Down Payment
If you have a lot of debt, you may find it challenging to set aside money for your savings on a regular basis. Therefore, you may not have funds available that you can use for a downpayment. The good news is, with VA loans, this isn’t too much of a concern. While other loan programs require a downpayment of at least 3.5%, VA loans do not. Qualifying applicants can take out a VA loan without making a down payment.
Could Help Your Credit Score
A bad credit score isn’t the end of the world, but it is something you should take seriously. The good news is you can always turn your financial situation around. You can start working on ways to improve your credit, and a VA loan may be able to help. Making your mortgage payments on time could help improve your credit score. Therefore, a VA loan may benefit you financially in the long run.
Learn More about the Advantages of VA Loans
Learn more about the benefits of VA mortgage loans. Call our office today to speak to an expert and get the information you need.