Credit Score for VA Loan in Houston: What Every VA Buyer Must Remember in 2020
Did you know excellent credit scores are a good starting point for anyone willing to apply for a VA loan? VA loan offers one of the benefits among other government-backed mortgages. But the credit score could bring a fatal change. If you are not eligible for the credit score requirement, you cannot utilize the mortgage either. So, what is the minimum credit score you need to show? Is the VA loan’s credit score requirement more stringent than other house loans?
Let’s face the truth: VA buyers do not have the perfect scores, either. The credit score for VA loan in Houston is designed in a way that the borrowers with less-than-perfect scores can also apply. VA loan accommodates many military buyers with multiple benefits. Even when your credit is not too significant, do not worry. Get started on VA loans and gather necessary information on credit scores now.
VA Loan does not Need Minimum Credit Score
Before jumping into the process, be aware of the role played by the Department of Veterans Affairs. VA supervises the program and guarantees a particular portion of the loan. This is thoughtfully done to avert the risk of default. On the other hand, the VA does not issue the mortgage or enforce credit score requirements on private lenders. Only the VA-approved lenders fix and bend the rules according to the borrowers’ situations. Generally, the lenders use a credit score benchmark. If your credit score does not meet the benchmark, you are ineligible for the VA financing. The lenders enforce the minimum credit score to be 580, at present.
In Comparison to the Conventional Loans
You might have heard that a VA loan proves to be a better fit than conventional loans, but why? The first thing you need to remember is that a conventional loan is backed by a government agency. The lenders are at a higher risk if the borrowers default on the loan. High credit scores and large down payments – these are two aspects of conventional financing. Nowadays, many conventional lenders set the credit score benchmark at 740. On the other hand, the minimum credit score requirement for a VA loan is 580. Along with it, VA loans do not require down payment either.
If You Choose a Co-Signer
Most of the VA buyers are married, and the department has come up with the co-borrowing solution. If you are unlikely to meet the financial requirements, the co-borrower can help. From increasing the borrower’s income total to financially binding them to mortgage, the co-signer can do plenty. If the co-signer has a long debt history or damaged credit, the VA loan application will suffer. Therefore, the co-borrower must have a healthy financial history for obtaining VA financing. The lender checks the co-borrower’s debts, bankruptcies, foreclosures, and income. Of course, you can guess, the credit score is under scrutiny.
In the end, you need to discuss the credit situation with your lender. If you need to improve it, the lender will always walk you through the process. So, keep looking for a professional VA-approved lender!
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.