For former members of the military, the challenge of adapting to civilian life can be quite acute. It is a common thing to see those who have left the military, either because their tour ended, they suffered disability or a simple decided to retire, to struggle. But when buying a home, the availability of VA home loans with bad credit means there is a financing option available to them.
The military holds a special place in the lending industry, with a variety of incentives offered to present and former members seeking loan funds for whatever reason. But securing mortgage approval from the VA depends on more than simply membership.
So, what are the criteria needed to secure approval on a VA home loan? What can be done to increase your chances, and where can they be secured from? Here are some factors that address those questions.
Qualifying For VA Financing
Those that qualify for financing from the VA are former members of the military. But that is not to say that any former member will get the green light. Securing a VA home loan with bad credit comes down to satisfying 3 key conditions.
Because those seeking mortgage approval from the VA often have incomes that are not military related, there is every chance they have suffered some bad financial experiences. The VA wants to be sure they are not supporting a major financial risk.
As a result, applicants cannot have defaulted on a loan in the previous year, cannot have bankruptcies on file within the previous 2 years and must have proof of gainful employment. Once these criteria are satisfied, then a VA home loan is on the cards.
The definition of former military members is not as clear cut as it would seem, with those unable to serve because of disability included in the group – at least by the VA. As a result, currently disabled or receiving benefits can apply for a VA home loan with bad credit.
Just as with any other loan, taking steps to improve your credit scores (even marginally) can make a huge difference to the chances of securing mortgage approval from the VA. The best way to do this is to clear some existing debt, or to at least be up-to-date on credit card and other bills. It may be worth taking out some small personal loans to deal with individual debts.
The advantage when seeking a VA home loan is that with each debt that is paid off, the credit score increases and the debt-to-income ratio is improved. The ratio is the key factor in any loan application. Get that right and approval is almost guaranteed.
Where To Get A VA Home Loan
Despite the title of the loan product, a VA home loan is not actually granted by the VA. They only offer their backing to the applicant, while the mortgage provider actually provides the funding. For this reason, it is necessary to find a suitable online lender to get the best possible terms.
However, the fact the VA is willing to sponsor the applicant means the terms secured can be very good, not least because the interest rates are lower. But getting a VA home loan with bad credit usually means no down payment is needed, and the VA guarantees 25% of the mortgage too.
With a reduced level of risk, lenders are happy to grant the mortgage. Still, look out for certified VA home loan providers. These are trusted VA partners, reducing the risk of being taken advantage of, and offering a greater likelihood of mortgage approval from the VA.