Question about being approved for a VA Loan

[Anonymous]

I am a veteran who is looking to use my VA Loan. My credit score is 630 on Transunion, 651 on Equifax and not sure about Experian Faco is 640. I have four student loans that are listed as 120 day lates on my report and I have one charge off for a private loan that is due to come off on June 30th.

The student loans were late because of an error- I was still a fulltime student, they went into repayment and I ignored the payment notices. I didn't even open the envelopes, because I thought they were just updates on a loan I didn't have to pay back yet.

They were brought current, and are now all showing a 0.00 balance due to reconsolidation. I have written them letters and called but have gotten no help. They still show 120 days late.

What are my changes of getting a VA loan with these items still showing on my credit report? Other than the Charge Off I have no collections, My utilization is under 20%, my salary is around $65,000yr - with monthly debts of $800 combined with my wife's student loan. Savings are very little so I want to go VA for that reason. Less than $2000 right now.

My wife has great credit, she is a work from home mom with a part time salary of around $12,000

Any experts out there who can help me? I live in San Diego.

[ShanetheMortgageMan]

When did the 120 day late payments occur?  If it was over 12 months ago then you should be OK as long as the scores qualify (aim for 640).

Since you were in school when they went into repayment, what were the requirements for them to continue to be deferred?  Did you meet those requirements (including sending any information in)?  Can you send them proof you were in school at that time?  Have you visited the Student Loans forms to see if they have any advice on how to get those payments removed?

What price range are you looking to buy in?  How long as your wife been working part-time at her same employer for?

[Anonymous]

Hi there, thank you for the reply. The consolidation went through in July of 2010. Is that the date they count 12 months from?

Will it be okay to apply for a mortgage in July of this year if the student loan companies don't remove them? I sent in letters two weeks ago to all of the student loan companies, showing them that I was still in school when they went into repayment and copies of my reports showing that these lates are the only negative things on my credit report.

As of this morning they told me that my request was DENIED because I didn't inform them previously.

My wife is a self-employed writer and has been for the past 6 years for the same publisher.

What do you think my chances are with a mid score of 630? My wife's mid-score is 700.

[Anonymous]

Also I am trying to get a loan for $385,000, in my prequalification with Chase bank, they said our income was sufficient for up to $500,000, but the student loans would probably be the deal-breaker for that.

[ShanetheMortgageMan]

It depends on if July 2010 was the last time it was reported as 120 days late.  If it is, then in July this year it'll be 12 months old and you should be fine with most lenders... however I'd still recommend you aim for at least a 640 score.  It's possible to get decent terms on VA financing with a 600 score, but below 640 scores underwriting guidelines can be pretty strict (including requiring longer periods of times with no new defaulted accounts, like collections, charge-offs, etc.).

[Anonymous]

Thank you, Shane. I am going to apply for my mortgage the first week of July and hope for the best. I may lose the house I'm interested in by waiting, but I guess that's the price I have to pay for not opening my mail and taking care of this when it was happening.