How to get a VA loan with bad credit: A complete guide

Quick insights

• The VA doesn’t have a minimum credit score requirement.va-loan-guaranty-guide-22 
• Many lenders choose to set their own credit score requirements, with some lenders willing to work with borrowers who have a bad credit score. 
• Depending on the details of your situation, getting a VA loan with bad credit (“poor” means 580 or lower) may be possible.va-loan-guaranty-guide-22

When evaluating your mortgage loan application, lenders carefully consider your credit score. Like other types of loans, VA loans also take your credit score into account. But simply having a bad credit score doesn’t automatically prevent you from obtaining a VA loan.va-loan-guaranty-guide-22

Can you get a VA loan with poor credit?

Yes, it may be possible to get a VA home loan with poor credit. The U.S. Department of Veterans Affairs (VA) doesn’t dictate a minimum credit score requirement for borrowers. But many VA lenders impose their own credit score requirements on borrowers.va-loan-guaranty-guide-22

A poor credit score falls below 580.myfico-what-is-credit-score Generally, lenders prefer to work with borrowers who have a minimum credit score of 620.va-loan-guaranty-guide-22 With that, obtaining a VA home loan with bad credit is a challenge. But some lenders are willing to provide VA home loans to borrowers with credit scores below the 620 mark. 

VA loans come in several different forms, including VA purchase loans, VA cash-out refinancerefinance-hl000061 loans, and VA interest rate reduction refinance loans.va-home-loan-types-25

What is the minimum credit score you need for a VA loan?

Since individual lenders, not the VA, set credit score requirements, the minimum credit score you need to get a VA loan varies from lender to lender. 

For example, Chase requires a minimum credit score of 620 to obtain a VA loan. But other lenders have minimum credit score requirements of 550.freedom-mortgage-review-business-insider-25 It’s still possible other lenders offer VA loans for those with an even lower credit score.benefits-of-a-va-loan-april25

Credit score requirements across various home loan types

When compared to other home loan types, the VA home loan credit score requirements tend to be more flexible. But other government-backed home loan programs also offer relatively low credit score requirements. 

This list highlights credit score requirements across different home loan types:

• VA home loan: No minimum credit score; many lenders offer loans for borrowers with credit scores in the mid-500s
• Federal Housing Administration (FHA) loan:mortgagee-letter-hud-2010 500–579 for borrowers with a 10% down payment; 580 for borrowers with a 3.5% down payment
• U.S. Department of Agriculture (USDA) loan:direct-loan-prog-req-usda-24 No minimum credit score; full credit review required for scores under 640
• Conventional loan:fannie-mae-selling-guide-25 620

Note that Chase does not offer USDA loans. 

How does a low credit score impact your VA loan?

When you have a low credit score, it can impact your ability to get a VA loan. But if your overall financial situation is strong, it may be possible to get approved for a VA loan with a credit score of at least 550.freedom-mortgage-review-business-insider-25

But whether or not you’re approved isn’t the only way a low credit score can impact your VA loan. Below is a look at the other potential impacts of getting a military home loan with bad credit:

• Higher interest rates: In general, lenders compensate for taking on the risk of a lower credit score with higher interest rates. If you get approved for a VA loan with bad credit, you may have a higher interest rate. 
• Higher monthly payment: With all other factors the same, a higher interest rate leads to a higher monthly payment. Unfortunately, this can cut into your monthly budget. 
• Pay more in total interest charges: When paying down your loan, a higher interest rate means you’ll pay more in interest charges over the loan term. 

Potential benefits of getting a VA loan with bad credit

Every financial decision comes with some advantages and disadvantages. Here’s a closer look at what to know about getting a VA loan with a low credit score. 

• Achieve homeownership: If you’ve been dreaming of owning your own home, getting a low credit VA loan can help. 
• Stabilize your housing situation: When you sign up for a mortgage, you’ll likely stabilize your housing for the long term. The predictable mortgage payment can make budgeting for housing easier. 

Tips for improving your credit score for a VA loan

Even if you can get approved for a VA loan with bad credit, waiting to get approved with a higher credit score could lead to a significantly lower interest rate. For many buyers, that’s enough of a reason to pause the home search while building up their credit score. If you want to grow your credit score, the following strategies can help:

• Make on-time debt payments: Payment history impacts your credit score. Sticking with on-time debt payments can help you grow your score over time.get-keep-credit-score-cfpb-24 
• Avoid taking on new debt: Applying for new credit can hurt your credit score. Avoid making credit applications in the lead up to your mortgage application.does-credit-score-affect-cfpb-24
• Lower your debt-to-income (DTI) ratio: A high DTI can pull your credit score down. Paying off revolving debt can lower your DTI and possibly improve your credit score.get-keep-credit-score-cfpb-24

VA loans with bad credit FAQ

Can I get a VA loan with a 500 credit score?

Some lenders offer VA loans to borrowers with credit scores of 550 and higher.freedom-mortgage-review-business-insider-25

What is the 4% rule on a VA loan?

The 4% rule on the VA loan means that a seller can’t provide seller concessions worth more than 4% of the home’s reasonable value.va-funding-fee-cc-va-25 For example, if the home in question is worth $200,000, then the maximum seller concessions are $8,000.

Why would a VA loan be denied?

A bad credit score isn’t the only reason a VA loan might be denied. Other issues could include insufficient income, missing information, unstable employment or appraisal issues.homeownership-drm-lender-denial-va-23

In summary

While getting a VA loan with bad credit is possible, it’s not always the right move for your financial situation. Take the time to weigh your options before pursuing a VA loan with bad credit.