As with all mortgage loans, a borrower’s credit score is a key component of the approval process. One of the most common questions that we receive is, “What’s the minimum credit score required for a VA loan?” Depending on the scenario and the lender, the minimum credit score for a VA loan can vary. We will explain the credit score requirements and how to get approved if credit scores are borderline.
Credit Score Ranges
When it comes to credit scores, it is a confusing area. For instance, many get “free” online retail credit scores. Then, their mortgage credit score is different and often lower than the free scores. The reason is that mortgage credit scores use a different scoring model and sometimes the credit range varies too. Mortgage credit score ranges are generally 300 – 850. Although, many want to have an 800 credit score, it is not necessary for a VA loan approval.
All VA lenders pull a tri-merge credit report which combines all 3 credit bureaus. Next, lenders use the middle credit score.
VA Loan Minimum Credit Score Requirements
If you have a mortgage credit score of 640 or higher, you are ready for VA Loan approval. Keep in mind, a credit score alone will not ensure a VA approval. Of course, the higher the score, the better chance of loan approval.
Loan approval is possible with a credit score as low as 620. If your credit score is lower than 620, that doesn’t mean that you will be denied. Be sure to consult with an OVM Financial loan officer to consider all options and set an approval plan in motion.
For VA eligible borrowers that are having a hard time getting approved, there is a manually underwritten VA loan. VA and our underwriters want to ensure the buyer has experience in paying debts on-time. In other words, getting a mortgage will not be a shock to their system and cause hardship to the buyer. Often a large part of manual underwriting includes providing supplemental credit references.
Using Alternative Credit to Get a VA Loan Approval
A common reason for a VA manual underwrite is limited credit. Additionally, it could be limited re-established credit after past credit troubles. An example could be working on getting 3 trade lines of good credit and we have one showing on credit. The other could be rent. But, there are other credit references which can meet VA credit requirements. Alternative credit references could include the following and more that are not reporting on a credit report:
- Cell phone
- Small store account
- Buy here pay here car loans
- Furniture loan
- Rent to own account
- Insurance (auto, renters, life, disability)
When using alternative credit, it is important that they are paid on-time, are verified, and support the likelihood that the buyer will make their payments when due.
VA Loan Minimum Credit Score for Manufactured Homes
For eligible doublewide manufactured homes, VA loans offer up to 100% financing towards the purchase price. Manufactured homes require a VA loan minimum credit score of 680. Furthermore, VA loans require that the manufactured home foundation meets HUD requirements.
What is the Minimum Credit Score for VA Condo Loans?
Other than a condo must be listed as an approved VA condo, the credit requirements are the same as other VA loans.