Question About VA home loan and credit

[fico-newbie33]

My question is...can I be approved for a VA home loan when my credit score are as follows:

EX 545

WQ 556

TU 576

I currently make 60k anually as an RN, without overtime.

wife dont work

bought a home using VA before, when credit score was still 740.

currently owe 2500 on a Home Depot collections

no car payment

no housing/rent payment, I live with relatives who dont charge rent

looking for a home at 300-350k price range

thanks for your inputs

[Anonymous]

Not to snap at you but if you had a VA loan before, you'd know that VA loans are not credit based.

[ShanetheMortgageMan]

When did the Home Depot collection happen?  If you have no debt payments you should be OK to qualify for the $300k home, but the $350k home is looking like it'll put your debt to income ratio too high.  Overtime could help you qualify for the larger sales price if you've made overtime for the past 2 years.

[fico-newbie33]

Thanks for the input guys.

As for the VA loan not being credit based, I have read on some forums that credit does come into factor even with a VA loan. Is there someone out there that can point out how much a factor does a credit score come into play when qualifying for a VA loan, especially now that lending practices are so much tighter than before.

As for the $2500 Home Depot collections, DOFD may be like 2yrs. ago. I havent paid it, and planning to ask for a  PFD.

[ShanetheMortgageMan]

Sorry for the delay, been busy over the past 5 days.  Anyway, since the Home Depot item was over 2 years ago it shouldn't impact your ability to qualify for VA, your credit should be fine.

[Junejer]

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@Anonymous wrote:

Not to snap at you but if you had a VA loan before, you'd know that VA loans are not credit based.

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Hi TA, I had a VA loan that I got nearly 15 yrs ago. Since then, I have gotten numerous other mortgages (which were all conventional-type), and to be completely honest with you, I hadn't remembered that VA loans were not credit score driven until I joined this forum. So, it's completely understandable that FICO newbie didn't remember.

[Anonymous]

Although eligibility for the VA loan is not credit-driven, getting a lender to use your VA loan eligibility may be based on your credit score. I think that is what you were referring to? Some lenders will not work with you for a VA loan if your credit score is under 580, I have read. So, the VA may print out your cert. of eligibility and say you're GTG because of your service, but if your credit shows recent delinquencies in the past 12 months, the agent you're working with may not want to work with you.

[Anonymous]

IVY- Yes, you are right. But I think that holds true for any case VA or non VA. FHA is the same way, not credit driven but you cannot have collections/outstandings here and there and expect to be approved.

[Anonymous]

fico-newbie,
I had a long chat w/ a VA lending specialist this morning and asked this very question.. the lowdown is, while credit will still affect your VA loan rate, the effect will be much less drastic than the effect on a regular mortgage.. he said the point spread for a VA loan is only 6.0% for best credit to 6.5% for WORST credit, while other mortgages can start swinging upwards of 7.0% or higher for bad credit, plus the icky ARMS, balloons, etc.

So, that's the lowdown... yes, it may have some effect based on the lender, but it will be marginal.

[Anonymous]

Man this is great news to me as I completely forgot about my VA loan!  PLUS, my first round of disputes proved very fruitful - 13 BADDIES GONE - and BK gone from 2 - other one soon to drop.  My scores now are not that far from OPs. 

Plus I just found out there's an additional benefit for TX VA loans.  PLUS the house I'm looking at just dropped in price by 6K! 

Things are looking up!