How to Get a VA Loan With Bad Credit (2024)


At a Glance

Securing a VA loan with bad credit isn't impossible, but it is common for many lenders to have a more stringent credit requirements.

Veterans and service members may have what's considered “poor” or “bad” credit and wonder if they can still use their VA home loan benefit. It’s important to understand the VA doesn't set credit score requirements. In fact, the VA doesn't mandate a minimum credit score at all.

The ability to obtain a VA loan with bad credit is determined by the specific credit requirements of each individual VA lender. Let’s take a closer look at how lenders may assess your poor credit and risk when applying for a VA loan.

Can you get a VA loan with bad credit?

The short answer is: Yes, it’s possible to get a VA loan even if you have bad credit. Since VA loans do not have a minimum credit score set by the VA, it is ultimately up to the lender and their credit score requirements.

At Veterans United, we have a 600 FICO credit score minimum in most cases. However, Veterans who aren't quite ready score-wise can work with one of our credit consultants to develop a plan to boost their credit and get on the path to loan preapproval. We offer this complimentary, no-obligation service to help Veterans achieve homeownership.

What is considered “bad credit” for a VA loan?

The first issue is tackling unclear phrases like "bad," "poor" or "less than perfect" credit. We use that kind of language since it can be tough to discern what constitutes "good" credit or at least a credit score that can get prospective buyers closer to the dream of homeownership.

Credit scoring firm FICO defines "Fair" credit as scores from 669 to 580, with anything below designated as "Poor" credit. But one lender's definition of bad or subprime credit can be very different than another's.

Across the spectrum of VA lending, a 620 FICO score is a common credit score minimum. But that benchmark can be higher or lower depending on the lender, the economic environment, how much you're hoping to borrow and more.

Bad Credit May Not Be the Only Hurdle

Veterans who've experienced bankruptcy, foreclosure or a short sale might face unique homebuying challenges beyond the hit to their credit score (which can be substantial).

These negative credit events usually come with required waiting periods, also known as seasoning periods, during which the Veteran will likely be unable to close on a home loan. The length of these waiting periods can vary depending on the event and the type of loan you're hoping to get.

Generally, VA loan waiting periods are shorter than conventional mortgage ones. But much like credit score minimums, guidelines on seasoning periods can vary by lender.

Compensating Factors for Bad Credit

If your credit score is on the lower end, VA loan underwriters may see if you meet any "compensating factors." These factors can help offset concerns and weaknesses in a buyer's loan application.

Below is a list of factors your VA lender may consider if you have poor credit:

  • Minimal debt
  • Long-term employment
  • Significant liquid assets
  • Military benefits
  • High residual income
  • Healthy record of previous home ownership
  • Minimal increase in home expenses

Keep in mind the VA notes that compensating factors must greatly exceed what would be considered a normal program requirement.

» CALCULATE: Calculate your VA Loan savings

How to Improve Your Credit Score for VA Loans

While it isn't exactly novel (or always easy), one of the best ways to improve your credit score is simply to pay your bills on time. Your payment history is the biggest factor (35%) in dictating your credit score, according to FICO.

The second-biggest factor is how much you owe (30%), so strive to keep your credit balances at or below 30% of your total credit limit. For example, if you have a $1,000 credit limit, aim to keep your balance at or below $300. The last 35% is made up of your credit history length, new credit accounts and the types of credit.

Credit monitoring software can help you identify errors in your report and keep closer tabs on your basic scores. Just know that the scores you see from apps and tools will likely differ from those of mortgage lenders. Their scores are weighted specifically for mortgage lending.

You can also get free copies of your credit report from

One thing to be leery of is businesses claiming credit repair in exchange for payment. Veterans and service members can find plenty of free resources and credit education online.

Verify your VA loan eligibility (April 24, 2024)

VA Loans and Bad Credit FAQs

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

Generally, yes, this may be possible. Typically, VA lenders look for a credit score of around 620, but a lower score may be approved with compensating factors. The VA does not set a minimum credit score to qualify for a loan, so credit score minimums will vary by lender and other factors.

Does a lower credit score affect your VA loan interest rate?

A lower credit score can have an impact on the interest rate lenders quote. Lenders typically view higher credit scores as indicative of lower risk, often leading to more favorable interest rates. Therefore, lower scores may result in higher rates. Generally, the impact of your credit score on your rate is more pronounced with conventional mortgages than VA loans.

Does a lower credit score affect your VA closing costs?

Your credit score may affect closing costs if you purchase discount points. If your poor credit leads to an increased interest rate, considering discount points to decrease the rate might be a good idea. Rolling points into a VA loan for a new home purchase is not permitted, so you would need to have cash on hand to cover these costs during the closing process.

Are there specific VA lenders for bad credit?

Some lenders might market themselves as options for "bad credit" loans or "VA lenders for bad credit." Take a closer look at the costs, fees and fine print in these cases. Veterans may end up paying more for being deemed a higher risk with poor credit. Improving your credit score and talking to a VA lender about your situation is highly recommended. Veterans United has a credit consulting team that can help Veterans build up their credit if their score is lower than 600.

How long does it take to improve credit for a VA loan?

This depends on the shape of your credit and what negative events are impacting your score. Some Veterans who’ve encountered bankruptcy or foreclosure may need to wait a required amount of time before applying for a VA loan. Typically, at least a couple of years, but the length of time heavily depends on your specific situation.

See What You Qualify For

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How to Get a VA Loan With Bad Credit (1)

ByChris Birk, Director of Education

Chris Birk is the author of “The Book on VA Loans: An Essential Guide to Maximizing Your Home Loan Benefits.”An award-winning former journalist, Chris writes about mortgages and homebuying for a host of sites and publications. His analysis and articles have appeared at The New York Times, the Wall Street Journal, USA Today, ABC News, CBS News, and more.More than 300,000 people follow VA Loans Insider, his interactive VA loan community on Facebook.

About Our Editorial Process

Veterans United is recognized as the leading VA lender in the nation, unmatched in our specialization and expertise in VA loans. Our strict adherence to accuracy and the highest editorial standards guarantees our information is based on thoroughly vetted, unbiased research. Committed to excellence, we offer guidance to our nation's Veterans, ensuring their homebuying experience is informed, seamless and secured with integrity.

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How to Get a VA Loan With Bad Credit (2024)


How to Get a VA Loan With Bad Credit? ›

The short answer is: Yes, it's possible to get a VA loan even if you have bad credit. Since VA loans do not have a minimum credit score set by the VA, it is ultimately up to the lender and their credit score requirements. At Veterans United, we have a 600 FICO credit score minimum in most cases.

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

VA Loan Requirements With a 500 Credit Score

VA loan guidelines do not have a credit score minimum which means lenders are able to help with a VA loan with a 500 credit score.

What is the minimum credit score for Veterans United? ›

Veterans United typically requires a credit score minimum of 600 to qualify for a VA loan. You also need to meet ability-to-repay guidelines related to things like debt-to-income (DTI) ratio, residual income and more. Guidelines can vary based on your specific situation.

What is the minimum credit score for VA cash out? ›

Lenders will document credit, income, employment and assets for homeowners seeking a Cash-Out refinance. Guidelines and requirements for minimum credit score, maximum debt-to-income ratio, derogatory credit and more can vary by lender. The credit benchmark for a VA Cash-Out refinance is often a 620 minimum.

Can you get a VA loan with no credit history? ›

VA loans offer many benefits to veterans and active-duty service members. You don't need any down payment for VA loans and you don't even need a traditional credit history. For these reasons, VA loans are often easier to get than Conventional loans.

What will cause VA loan to get disapproved? ›

Common Reasons VA Loans are Denied

Income outside the qualification range. High debt-to-income ratio. Inconsistent employment history. Other factors outside your control (e.g., a private mortgage lender choosing to reduce or end participation in the VA loan program)

How hard is it to get a VA loan with bad credit? ›

Yes, you can get a VA-backed low-credit-score home loan. The VA itself doesn't set a minimum credit score, so credit requirements are set by the lender (more on that below). However, the VA does insist that lenders scrutinize the last 12 months of payment history listed on your credit report.

Are VA loans easier to get approved? ›

It's generally easier to receive a VA loan approval than a conventional mortgage because of the low credit score requirements for VA loans. The Department of Veterans Affairs itself doesn't require a minimum credit score.

Can I get a VA loan with a 580 credit score? ›

You can get approved for an affordable VA loan when your credit score is 580 or higher.

What credit bureau does VA loan use? ›

The three main credit agencies, Experian, Equifax and Transunion all use the FICO model and report their scores to a VA lender when asked.

What is the 210 day rule for VA? ›

For all cash-out refinances paying off an existing VA loan seasoning certification is required. The number of days from closing of loan being refinanced and loan closing of new loan will auto-calculate and cannot be less than 210 (days) or the guaranty will not be issued.

Does the VA check your credit score? ›

The VA doesn't set a minimum credit score for VA loans at the program level. Instead, the VA relies on lenders to ensure borrowers are a satisfactory credit risk. VA lenders typically require a FICO score of at least 620. High loan amounts, such as those exceeding $1 million, may require a higher credit score.

Can I use my spouse's credit score for a VA loan? ›

Most VA mortgage lenders will want to see that both you and your spouse have a credit score of 620 or above. If your spouse falls below that line, you may need to consider qualifying for the loan on your own or wait until your spouse's credit score improves.

Why would the VA not approve a loan? ›

One of the most common reasons VA loan denied is application errors. Failing to provide accurate and complete information on your loan application can raise red flags for underwriters. Double-check all the information you provide and make sure it matches your supporting documents.

Can you get a VA loan without proof of income? ›

VA lenders have to consider your sources of income when applying for a VA loan. Having a job can be a big plus as a loan applicant for a VA mortgage but it isn't required. The VA home loan program allows lenders to look at other sources of income.

What is the down payment for a VA loan? ›

Do VA Loans Require A Down Payment? VA loans are attractive because they usually don't require any down payment. This is an important benefit for home buyers who are short on cash. A down payment of 10% on a home costing $240,000 comes out to $24,000.

What kind of home loan can I get with a 500 credit score? ›

For homebuyers with scores between 500 and 579, it's still possible to obtain a mortgage guaranteed by the FHA, but a minimum 10% down payment is required. Here are some FHA lenders to consider. New American Funding: This lender offers FHA 203(k) loans for homes that need renovations or repairs.

Can I get a VA mortgage with a 580 credit score? ›

You can get approved for an affordable VA loan when your credit score is 580 or higher.

Can I get an FHA loan with a 500 credit score? ›

Technically, you can get approved for an FHA loan with a median FICO® Score of as low as 500, but an FHA loan with a score that low has some serious drawbacks. The first drawback is that you'll need a down payment of at least 10%. Secondly, when qualifying with a score that low, it's considered a subprime loan.

Are VA loans hard to get approved? ›

VA loan denial isn't uncommon, but your odds are generally better with a VA loan. According to HMDA data, 12.93% of VA loan applications received a denial in 2022, compared to 17.29% of FHA loans and 17.9% of conventional loans. While not uncommon, many scenarios may be preventable.

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