When it comes to VA loans, the Department of Veterans Affairs doesn’t have a set minimum credit score requirement. However, most private VA lenders do have their own credit score requirements, which will vary depending on the individual lender.
The relaxed credit requirements are one of many factors that make VA loans favorable to potential borrowers compared to other types of home loans, such as conventional, FHA and USDA loans. The following table provides an overview of the standard credit requirements for each loan type:
|Loan Type||Minimum FICO Credit Score||Minimum Set By...||Required Down Payment (% of Purchase Price)|
|USDA||No set requirement||Private lenders||0%|
|VA||No set requirement||Private lenders||0%|
Since VA loans are government-backed, there is greater protection for private VA lenders, making them more able and willing to approve borrowers with lower credit scores. The VA does not issue loans directly, but does partially guarantee loans for borrowers who meet the standard qualifications to be deemed eligible for a VA home loan. This guarantee helps mitigate the lender's risk and encourages them to offer loans to individuals who may not meet the strict credit requirements of other loan types.
The Department of Veterans Affairs (VA) does not set a minimum credit score requirement to qualify for a VA loan. However, most VA lenders will require at least a 620 FICO credit score to finance the mortgage.
As previously mentioned, the minimum credit score required for a VA loan will vary by lender. Here are some examples of what credit scores some of the top VA lenders are looking for in 2023:
While there isn’t a set minimum credit score requirement for VA loans, you may be curious to see how your individual credit score will hold up in the VA loan process. Check out the following chart to see how many borrowers like you successfully closed on their VA loans within each credit score range last year:
|FICO Credit Score Range||Number of VA Loans Closed in 2022|
Note: Above values based on 2022 Ginnie Mae Loan Level Disclosure data
Keep in mind that a variety of factors aside from your credit score can come into play when VA lenders are evaluating you as a potential borrower, such as your debt-to-income ratio or if you have a co-signer or co-borrower. For more information that is specific to your unique financial situation, contact a VA-approved lender to confirm your eligibility for a VA loan. You can also calculate your own estimate of what home price range would fit your budget with a VA Loan Affordability Calculator.
Getting informed about your own credit score is an important initial step in the VA loan process. If you aren’t sure how to get started, there are plenty of easily-accessible resources to guide you in exploring your personal credit history. You can visit AnnualCreditReport.com to learn more about credit and even request your free credit report today!
Keep in mind that the credit score you receive from a credit reporting site will sometimes differ from the score your mortgage lender will be evaluating. When lenders pull your credit report, they typically look at FICO credit scores that are specifically calculated for mortgage lending, while credit reporting sites often use credit scores generated by generic scoring models. This difference could have little to no impact on whether you qualify for a VA loan, but it’s still an important factor to consider when trying to evaluate your own credit score.
If you’ve been asking yourself this question, you aren’t alone! Many potential borrowers are concerned about having bad credit or no credit when initially going into the VA loan process. According to a February 2023 Experian report, the national average FICO credit score is 714. Experian also notes that credit scores below 670 fall into the “fair” or “bad” groups. However, most VA lenders will typically look for a minimum FICO credit score of 620 to qualify for a VA loan.
Even if your credit score falls below this benchmark or you have little to no credit history, you shouldn’t give up on your goals of homeownership. There are a variety of steps you can take to establish or improve your credit and increase your chances of qualifying for a VA loan.
Learn More: How to Get a VA Home Loan with Bad Credit
If you have bad credit or a low credit score, there are strategies you can adopt to improve your creditworthiness and increase your chances of qualifying for a VA loan. Here are some steps you can take:
Having a good credit score can significantly impact your VA loan experience aside from just helping you qualify. Borrowers with credit scores in the 720-740 range can often expect better rate terms, lower fees and more competitive interest rates when applying for a VA loan.
Borrowers with strong credit scores may also have access to loan programs with larger loan amounts and more flexible repayment options. Additionally, maintaining a solid credit history could potentially expedite the loan approval process, allowing applicants to gain faster access to funds for purchasing a home or refinancing an existing loan. These advantages could translate to significant savings over the life of your loan, making it worthwhile to work on improving your credit score before moving forward with your VA loan application.
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† ICB Solutions is a division of Neighbors Bank, which is an affiliate of Mortgage Research Center, LLC dba Veterans United Home Loans.