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Member
NewShoes
Posts: 8
Registered: ‎07-28-2009

Need updated info on VA loan please

Though there is not a lot of info/threads covering VA mortgage loans, what I have found is somewhat dated.  At one point there was some info floating around that they don't look much at credit scores - can anybody tell me if that's true?  What is the criteria?  My H and I have been working on improving our scores, we finally made it over the 620 threshold and then our the last credit card that needed updating did (we are users one of my parent's cc's and the account is approx 22 years old - it was paid off and then my H and I were dropped from it (according to when we pulled our new reports) and so it changed our credit history from 22 years to 7 and 8 years and tanked our scores again - my new EQ is now 574 and my H's is 610).  So, I would like to get into a home before the tax credit runs out, but I don't really think I have the time for some of our old lates to fall off to make the scores we need.

 

So again, we were wanting to go the route of a VA loan but I didn't want to apply if I don't even have a chance at this point - I can't face the dissapointment - I just want to be realistic...

Valued Contributor
IOBA
Posts: 2,658
Registered: ‎08-13-2009

Re: Need updated info on VA loan please

I can share what I learned when I talked to the VA.

 

1.  Yes, they do look at credit scores.   The score will affect your rate.

2.  They look at credit history.  Bads (like late payments and collections) will affect your eligibility.

 

The lady told me that if the score is too low, they will not approve the loan and issue a VA certificate.  She would not define what "too low" of a credit score is. 

 

I just looked in my phone book and I don't have their easy number.  If you find it, please post it.

 

Thanks. 

Valued Member
ineedadvise
Posts: 48
Registered: ‎04-18-2009

Re: Need updated info on VA loan please

There are a couple of us in the last few months doing VA so look through the postings the last few months and see who's around...I know at least two of us who have recently gone through went the VA route.    I can ONLY speak of my experiance and tell you what I was told by my LO.  So my hubby and I were pre-approved VA July 22nd, with a qualifying score of 619.  At that time I was very nervous with the 619 B/C i thought ANYTHING under 620 would not fly, my LO reassured me that were were OK because the VA was not score driven.  So everything is all set, we find the house, we find the second house, etc.  Our loan app goes to UW and everything is all go.  Last week when I spoke to our LO about locking the rate he called me back and said he had a heart attack for a second.  He saw our qualifying score as 619 and thought that this could be it for our loan.  Fortunatley for us with a couple of our cards paid off our qualifying score was now 637, but he said that the bank that he had that would still do loans down to 580 would not do VA.  Otherwise with the 619 would would not have been qualified.  So, I think you'll still see different answers, depending upon the lender, but I would definately shoot for 620.  Do you know what the scores you can get though myfico are for each of you??  They will use the lower mid score of the two of you, if you didn't know that already.  Just make sure you are looking at real scores, from here.  Also I was told 12 months no lates for accounts.  We were 10 months no lates on mone account and they didn't care, or ask about it.  I have a judgement from 6+ years ago (now finally off my record) that I had to provide proof that it was dismissed or satisfied.  I also have a collection from 3 years ago for $290 that they did not care or ask anything about.    I hope this helps...I know I was like a fish out of water because not many people go the VA route here, but if there's anyway I can help let me know.  Our closing is Friday, so my fingers are still crossed! 
Frequent Contributor
nathan
Posts: 411
Registered: ‎04-18-2007

Re: Need updated info on VA loan please

[ Edited ]

There is this myth going on that VA loan is not score driven. With this ecconomic climate, it takes good scores to get a va loan. Even though va does not stress on scores per se, lenders have the discretion to determine what scores are acceptable. One lo at penfed told me honestly that their cut-off score for va is 680 mid score void of derogs. He further said scores under 680 may be reviewed on a case by case basis and based on his experience, most vets to not close with lower scores. I am not implying that you cannot get a va loan with lower scores; what I want to emphazise is  the notion that va loan is less score drive may have been true in the past, but it is now a myth.

Message Edited by nathan on 09-08-2009 07:03 PM
New Contributor
GRILLMASTERNEEDAHOUSE
Posts: 68
Registered: ‎05-26-2009

Re: Need updated info on VA loan please


nathan wrote:

There is this myth going on that VA loan is not score driven. With this ecconomic climate, it takes good scores to get a va loan. Even though va does not stress on scores per se, lenders have the discretion to determine what scores are acceptable. One lo at penfed told me honestly that their cut-off score for va is 680 mid score void of derogs. He further said scores under 680 may be reviewed on a case by case basis and based on his experience, most vets to not close with lower scores. I am not implying that you cannot get a va loan with lower scores; what I want to emphazise is  the notion that va loan is less score drive may have been true in the past, but it is now a myth.

Message Edited by nathan on 09-08-2009 07:03 PM

No, its not a myth and if that company only approved VA loans with a 680 credit scores then you got the wrong LO. People confused themselves on the purpose of FICO scores for applying for a VA loans. There are "NO'  universal minimum score when applying for a VA loan. This is left solely up to the lender you are using. The score will decide your interest rate but not in the same manner as a conventional loan. Think about it..interest rates are driven base on the risk the bank is taking lending out money. VA loans are back by the goverment so the bank has no risk should you default on your mortgage. Therefore, you will get competitive rates even with lower scores that you wouldn't dare get with conventional loans are even qualify for that matter. The FICO cutoff score entirely depends on the lender you are using. Some as low as 580 and some as high is 660 just depends on who you are using. Point blanck VA looks at this:

 

1. Clean 12 month credit history.

2. DTI under 41%

3. Collections Paid in Full

4. Judgements and bankruptcy requires other steps.

 

What a good FICO score is going to do is help a good interest become a great interest rate. I closed with a 603 mid score at 5.5% and the process took a grand total of two months from finding an agent to closing on the house. The first step is finding a bank and a LO who benefits YOUR situation not settling for their policy.

Grill Master now has a house! Closed 8/26. Yay!
Senior Contributor
mickie08
Posts: 3,299
Registered: ‎04-22-2008

Re: Need updated info on VA loan please

The point here is that the FICO requirement is lender based and 90% of FHA, VA, etc lenders are requiring 620 or more without compensating factors such as low DTI and/or high reserves.  So in reality, just like FHA, Va has now become VERY score driven even if it is not a direct requirement of VA/FHA.  The bottom line is that due to the defalut rate on loans with sub 620 scores, FHA and VA are actively going after companies that loan under that if their default rates go higher than the normal average.  SO even though they do not require the 620, if you are loaning under 620, you face a much higher chance of FHA/VA review and if loans start to default, a much higher chance of action being taken by FHA/VA.  SO, most banks/brokers/investors do not accept sub 620.

 

That said, there are still some program out there, especially if you have good reserves and low DTI. 

New Contributor
GRILLMASTERNEEDAHOUSE
Posts: 68
Registered: ‎05-26-2009

Re: Need updated info on VA loan please

The point is a person who meets VA underwriter guidelines now, and is ready to purchase now, there are lenders including major banks, that will lend with FICO under 620 for a VA loan and very competitive rates. There are MANY out there who was a mimimum of 600. So I don't buy the 90% theory. It requires homework of the buyer
Grill Master now has a house! Closed 8/26. Yay!
Member
NewShoes
Posts: 8
Registered: ‎07-28-2009

Re: Need updated info on VA loan please

Thanks for your input everybody.  OK - so my new question is who are these banks/lenders that are giving out these loans?  We have reserves and a %20+ downpayment if needed.
Senior Contributor
mickie08
Posts: 3,299
Registered: ‎04-22-2008

Re: Need updated info on VA loan please

With reserves and a high down payment, you should be able to find a lender fairly easy that will go below the 620

 

It is the people trying to squeeze in with 580 scores, high debt loads, and low cash for reserves/down payment that will have alot more trouble.  Liek I said before, comp[ensating factors such as high Down payment and reserves can usually get the FICO score or DTI waived.  It may take a few phone calls though to find the right lender.

New Contributor
GRILLMASTERNEEDAHOUSE
Posts: 68
Registered: ‎05-26-2009

Re: Need updated info on VA loan please

$0 down, Closing costs paid and 2K credit card paid by seller, 603 mid score, 5.5%...VA loan done in two months.

Grill Master now has a house! Closed 8/26. Yay!

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