What To Know About VA Loan Credit Score Requirements

If you're in the military or a veteran, a VA home loan may help you purchase a home. A VA loan  is backed by the U.S. Department of Veterans Affairs, which offers guarantees to private lenders that handle VA loans. Those guarantees mean lenders can offer a no down payment loan and less stringent requirements for eligible veterans, service members and surviving spouses.

You may also wonder what you need to have to qualify for a VA loan, including your VA loan credit score. Let's look into the details.

What Is The Minimum Credit Score For A VA Loan?

The U.S. Department of Veterans Affairs (VA) does not set a minimum credit score requirement for a VA home loan. Instead, mortgage lenders set their own VA loan credit score requirements. With Rocket Mortgage^®, borrowers need a minimum credit score for a VA loan of 580 for a purchase loan or refinance.

VA Loan Credit Score Requirements Vs. Other Loan Types

How do you compare VA loan requirements credit score to other common types of home loans? Great question.

• Conventional loans: Conventional loans are not backed by the government. They may be conforming (meaning they meet the guidelines to be sold to Fannie Mae or Freddie Mac) or nonconforming (meaning they don't meet the guidelines to be sold to Fannie Mae or Freddie Mac). Learn more about VA loans versus conventional loans. Conventional loans typically have a minimum 620 credit score requirement.
• Federal Housing Administration (FHA) loans: FHA loans are backed by the Federal Housing Administration. You may qualify for an FHA loan with a lower credit score or debt, possibly even with a bankruptcy in your financial records. Home buyers with a credit score over 580 can borrow up to 96.5% of the home value. Those with credit scores between 500 – 579 can qualify with a 10% down payment. Learn more about an FHA versus VA loan.
• United States Department of Agriculture (USDA) loans: USDA loans are designed for low-income individuals living in designated rural areas. Similar to how the VA backs loans, the USDA guarantees USDA loans. You usually have at least a 640 credit score to qualify.

Note that you may also have to meet certain other requirements to qualify for these types of loans – credit score is only one aspect of what lenders look for. For example, you may have to meet location, residency and income requirements.

Rocket Mortgage VA Loan Requirements

VA mortgage lenders like Rocket Mortgage often offer home purchase loans, refinances and VA jumbo loans. We've touched on the VA loan requirements for home purchases, but what about refinances or jumbo loans? Let's take a quick look:

• Refinances: A VA cash-out refinance allows for a loan for up to 100% of the appraised value of a home and extra cash. You must have a minimum credit score of 580 for a cash-out refinance. A VA Streamline Refinance, also called a VA IRRRL, another type of refinance, simplifies the refinance process. Follow your lender's requirements for credit score and other requirements.
• VA jumbo loans: A jumbo loan is a nonconforming loan, which means it exceeds the loan limits set for conforming loans. You must have a 640 credit score with a VA jumbo loan between $1.5 million and $2 million. You also must have a 10% down payment or equity amount.

Can You Get A VA Loan With Bad Or No Credit?

You can potentially qualify for a VA loan with bad credit. If you've previously lost a home due to foreclosure, you can apply for a new VA loan after a 2-year seasoning period.

What about situations related to bankruptcy? Here's how long it can take to get a new VA loan as long as you qualify:

• Chapter 7 bankruptcy: You must wait at least 2 years to get a new VA loan.
• Chapter 11 bankruptcy: It must be discharged or dismissed 2 years prior.
• Chapter 12 bankruptcy: It must be discharged or dismissed.
• Chapter 13 bankruptcy: You can get approval for a new VA loan as soon as it's discharged or dismissed.

Tips For Boosting Your VA Loan Credit Score

If you want to improve your credit score, Rocket Mortgage is here to help.

Consider paying off debt, save up cash and make all payments on time. Paying off debt can improve your debt-to-income (DTI) ratio – how much of your gross monthly income is spent on debt. The lower your DTI, the better mortgage rate you’ll typically qualify for.

VA Loan Credit Score FAQs

Still wondering about VA loan credit scores? Take a look at some frequently asked questions.

What are the benefits of getting a VA loan?

The benefits of getting a VA loan include no down payment required and VA loan interest rates are typically slightly lower than conventional rates. You can often refinance 100% of your home equity with a VA loan to get a lower rate or take cash out. You also don't need to pay PMI with a VA loan. In short, you can benefit from various lenient borrowing requirements as a qualified service member or spouse.

Why are VA loan requirements less strict than other loans?

VA loan requirements are less strict than other loans because the government backs VA loans as a benefit to those who served in the U.S. military.

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

Yes, with Rocket Mortgage. Other lenders set their own credit score requirements. Ask your lender for more details about all requirements for a VA loan. Before applying for a VA loan, check your credit reports to learn about the status of your credit. You can often do so for free at AnnualCreditReport.com.

What credit score is needed for a VA loan with Rocket Mortgage?

Rocket Mortgage requires applicants to have a 580 minimum qualifying credit score. However, you'll also need to meet other requirements, such as DTI, which you can calculate by adding your minimum debt payments and dividing by your gross monthly income.

The Bottom Line

What is the minimum credit score for a VA loan? The short and sweet answer: It depends on your lender. Borrowers will need to work with VA-approved lenders to meet all the qualifications, including credit score. You'll also need to meet income requirements and other factors. Check with your lender for all the details.

Ready to qualify for a VA loan? Apply today, and start on a home purchase or refinance.