What is the minimum VA loan credit score?

Quick insights

• Lenders may offer VA loans with lower credit scores to veterans as a benefit of service, as long as they meet the other VA loan requirements.
• To qualify for a VA loan, many lenders prefer a credit score of 620 or higher. However, you may be able to qualify with a credit score lower than that based on your income and credit history.
• If you can’t qualify for a VA loan with your current credit score, you may still qualify for another loan option if you meet other criteria.

If you’re an eligible veteran of the U.S. Armed Forces, you may be thinking about buying a home using a U.S. Department of Veterans Affairs (VA) loan. A VA loan has several benefits, including competitive interest rates, no monthly mortgage insurance, a lower down payment requirement and more relaxed debt-to-income (DTI) requirements than many conventional loans.

However, you will need to meet the minimum credit score requirements to qualify. Learn more about VA loan qualifications and how to qualify with a lower credit score.

What credit score do you need to qualify for a VA loan?

The VA doesn’t set a minimum credit score requirement for VA loans. Instead, it leaves the final decision to the individual lender. Many VA lenders prefer a credit score around 620, Some lenders may accept lower scores if you have other strong factors.

What do you need aside from a credit score to qualify?

To qualify for a VA loan, it's important to consider more than just your credit score. While a lower credit score may be accepted, getting a VA loan does come with other requirements that may not apply to conventional loans. These include:

• Certificate of Eligibility (COE): This is your proof that you have met the necessary service requirements to be eligible for a VA loan.va-loan-requirements-experian
• Paying an upfront funding fee: An upfront payment that can be paid at closing or added into your loan.  Check your COE or with your lender as certain factors (such as receipt of VA disability pay) may exempt you from this fee.
• Appraisal by a VA-approved home appraiser: The property needs to meet the VA’s minimum property requirements (MPRs) for safety, structural integrity and livability. In some states, a pest inspection may also be required.

• Residual income: One key factor is the VA's minimum residual income, which refers to the amount of money left over after all major expenses are paid, available for family support. This residual income serves as a guideline and should be evaluated alongside other credit factors. It should not be the sole determinant for approving or rejecting a loan application. Instead, it should be considered in conjunction with a comprehensive assessment of all credit-related aspects.

Also, VA loans can only be used to purchase a primary residence, not a second home or investment property.va-loan-requirements-experian

Can lenders approve a VA loan if you don’t have a credit score?

While you apply for a VA loan through a regular lender, like a bank or credit union, VA loans are government-backed. This means lenders may be able to relax their lending requirements. It’s also understood that veterans may not have been able to build their credit during their time in service to the same extent as civilian homebuyers.

To make their determination about what the minimum acceptable credit score might be, lenders may be willing to look beyond your credit score or even consider offering a loan if you don’t have a credit history. Here are several potential factors:

• Debt-to-income (DTI) ratio: This ratio divides your monthly debt payments, including your monthly mortgage payment, by your gross monthly income. Having a lower DTI is preferred because it shows that your debts are less likely to exceed your monthly income. For VA loans, a DTI of 41% or lower is preferred.va-loan-requirements-experian
• Employment history: While VA lenders understand that some veterans may not have a significant job history due to their time in service, having a stable employment and income history can also help you get approved with a lower credit score.
• Down payment: While VA loans typically don’t have a minimum down payment requirement,va-loan-requirements-experian being able to make a down payment might help your chances of getting approved with a lower credit score. It depends on the situation.

Can I improve my credit score to qualify for a VA loan?

If your credit score doesn’t meet the minimum requirements set by your lender, there are steps you can take to improve your credit.

• Check your credit report: If you feel your credit score is lower than it should be, it may be worth investigating whether there are any errors or inaccuracies affecting your score. You can obtain a free credit report from the major credit bureaus and review them for accuracy. If you find any errors or issues, you’ll need to dispute them with all three credit bureaus.
• Make on-time payments: Having a consistent payment history also impacts your credit score. If you have a history of making late payments, try setting up payment reminders or automatic payments.
• Lower your existing debt: Keeping your credit utilization ratio below 30% is generally recommended. If possible, try to pay down or consolidate your existing debt. If you’re finding it hard to make payments due to a lack of funds, you may want to look for ways to consolidate your existing debt or seek debt or credit counseling.
• Expand your credit history: If you haven’t needed credit in the past and have a limited credit history, you may need to grow your available credit. This can be done by taking out a new credit card and paying the balance in full every month. If you’re having trouble getting qualified for a credit card, consider using secured credit cards or becoming an authorized user on someone else’s account.

Consider an FHA loan

If you aren’t able to qualify for a VA loan and have a credit score of 500 or higher, you may be able to qualify for a Federal Housing Administration (FHA) loan. Like VA loans, FHA loans are also backed by the government, which allows lenders to offer them to borrowers with lower credit scores.

If your credit score is 580 or higher, you could get a loan with a minimum down payment of 3.5%. If your credit score is between 500 and 579, you’ll need to make a minimum down payment of 10%. FHA loans also have additional upfront and annual fees.

In summary

VA loans have some benefits for eligible veterans and their surviving spouses if they meet the minimum credit score requirements. If not, there may be other options that can still allow them to buy a home. Working with a home lending expert can help you find the option that fits your needs.