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VA Home Loan with Short Credit History

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VA Home Loan with Short Credit History

Hi all,

 

I'm in my mid-30's. Until recently I didn't have a credit score. I never needed one. I always paid with cash or my debit card. If I needed something expensive, like a car, I saved up and paid cash. A little over a year ago, I decided I wanted to buy a house. I'm tired of renting crappy apartments. My numbers:

 

Mortgage Scores: EX 729 | TU 726 | EQ 729

Credit History: Currently 1 year / 3 Open Tradelines, 1 Closed / No Derogatories

                           Capital One Secured $40/$500 opened Oct 2018

                           Discover IT $170/$2050 opened April 2019

                           Amazon Prime Store Card $80/$900 opened Aug 2019

                           Self Lender Loan opened Oct 2018/closed Oct 2019

Salary/Employment: VA Compensation 100%/ $3106.04 per month

Savings: $20,000 

 

My lease to my apartment runs out in January. I was thinking of starting the Home Loan process in October. That would put my oldest account at 2 years, my Discover at 18 months, and the Amazon card at 14 months. Would getting a VA Home Loan in October with my credit profile be possible?

I've been lurking this forum for a few months. I know about the AZEO method. I was planning to start around April which would give me 6 months to raise my scores some. According to the Myfico calculators, doing AZEO and aging the accounts 8 months, my scores should raise 20ish points. Also I could add another $10,000 to my savings by October. 

 

Thanks in advance for the help.

10 REPLIES 10
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Established Contributor

Re: VA Home Loan with Short Credit History

You have adequate credit scores.  If you've been at the same job like 2 years, then I believe you would be "In Like Flynn."   You might not get the lowest possible interest rate---but you would be close, based on credit scores.

 

Probably more important than even a credit score, or a credit history, is "Debt-to-Income ratio."  Meaning your monthly debts in relation to your gross monthly salary.  Usually, it seems like many lenders want 43% or less for your montly debts plus your potential monthly mortgage/tax payments (which, of course, would be a "debt," too).  So, if you make $10,000 a month, they would want a total montly obligation of $4,300 or less.  If $5,000 a month, it would be $2,150.

FICO 8: EQ 800; EX 797; TU 793
Message 2 of 11
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Established Contributor

Re: VA Home Loan with Short Credit History

It seems as if the VA believes a 41% DTI or below is ideal

 

If the salary you wrote us is your gross salary,  then 41% is $1,273.48.   They would want a monthly obligation of $1,273.48, ideally.

FICO 8: EQ 800; EX 797; TU 793
Message 3 of 11
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Established Contributor

Re: VA Home Loan with Short Credit History

Don't let what I stated deter you in any way.  I would consult the bank you want to use.  Even if your DTI is above 41%, there probably are "compensating" factors which the mortgage person would use----such as FICO score, time on the job, etc.

FICO 8: EQ 800; EX 797; TU 793
Message 4 of 11
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Established Contributor

Re: VA Home Loan with Short Credit History

I almost forgot:  Thank you for your service.

FICO 8: EQ 800; EX 797; TU 793
Message 5 of 11
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New Member

Re: VA Home Loan with Short Credit History

My income I listed is what I receive monthly from Veterans Comp. It's non-taxed. Yearly I get $37,272. I know lenders gross up tax free income, although I'm still not sure to what extent. I saw most lenders gross up by 15%, but Veterans United says 25%. At 15% my yearly income grossed up would be $42,863 and at 25% it would be $46,590. 

My only debt is my credit cards. No car loans/student loans. Once I start AZEO, my only debt would be the $20 I let report on one card. So I'm looking at a DTI of 1% or so.


 

Message 6 of 11
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Established Contributor

Re: VA Home Loan with Short Credit History

Whatever your monthly mortgage payment would be is factored into your "front-end" DTI.  

 

Your "back-end" DTI would be about 1%.

 

Added up, 41% or less is what the VA wants.

 

 

 

 

FICO 8: EQ 800; EX 797; TU 793
Message 7 of 11
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New Member

Re: VA Home Loan with Short Credit History

Thanks.

Message 8 of 11
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Established Contributor

Re: VA Home Loan with Short Credit History

If you don't mind me asking:  how much are you looking to spend?

FICO 8: EQ 800; EX 797; TU 793
Message 9 of 11
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Valued Contributor

Re: VA Home Loan with Short Credit History


@Newcredvet wrote:

Hi all,

 

I'm in my mid-30's. Until recently I didn't have a credit score. I never needed one. I always paid with cash or my debit card. If I needed something expensive, like a car, I saved up and paid cash. A little over a year ago, I decided I wanted to buy a house. I'm tired of renting crappy apartments. My numbers:

 

Mortgage Scores: EX 729 | TU 726 | EQ 729

Credit History: Currently 1 year / 3 Open Tradelines, 1 Closed / No Derogatories

                           Capital One Secured $40/$500 opened Oct 2018

                           Discover IT $170/$2050 opened April 2019

                           Amazon Prime Store Card $80/$900 opened Aug 2019

                           Self Lender Loan opened Oct 2018/closed Oct 2019

Salary/Employment: VA Compensation 100%/ $3106.04 per month

Savings: $20,000 

 

My lease to my apartment runs out in January. I was thinking of starting the Home Loan process in October. That would put my oldest account at 2 years, my Discover at 18 months, and the Amazon card at 14 months. Would getting a VA Home Loan in October with my credit profile be possible?

I've been lurking this forum for a few months. I know about the AZEO method. I was planning to start around April which would give me 6 months to raise my scores some. According to the Myfico calculators, doing AZEO and aging the accounts 8 months, my scores should raise 20ish points. Also I could add another $10,000 to my savings by October. 

 

Thanks in advance for the help.


Hi Newcredvet.

 

Based on the info you provided, you'll be fine.

Your VA income can be grossed up by 125% BUT that only applies to your debt to income ratios & not your residual income calculations.

What state are you in? Several like Texas, Florida & Illinois will waive your property taxes because you have a 100% service connected disability rating. This can save you thousands of dollars and help with your ratios so you want to make sure you check into that.

 

 

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
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Message 10 of 11
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