We are proud to serve the veterans and active-duty members of our armed forces that have served our country, and to assist this brave group of men and women to get into new homes, we will be posting a series of blogs to help them secure a VA loan. Part 1 was a basic introduction to the VA loan , and how it differs from a conventional loan . For Part 2, we discuss who can get a VA loan, and how your credit can impact your eligibility.
Am I Eligible for a VA Loan?
There’s a good chance you qualify to receive VA benefits if you meet at least one of the following conditions:
- You’ve served 90 consecutive days of active service during wartime
- You have 6+ years of service in the National Guard or Reserves
- You’re a U.S. citizen who has served in the armed forces of a government allied with the U.S. in World War II
- You’ve served 181 days of active service during peacetime
- You are the spouse of a servicemember who has died in the line of duty or because of a service-related disability
- You’ve served as a member in certain organizations (Public Health Service officers; cadets at the U.S. Military; etc.)
How credit impacts your eligibility for a loan
Credit history is one of the key factors that determine your eligibility for a VA loan. Typically, you’ll need to maintain a score of at least 640 before applying. However, if you happen to fall below that mark, we do have other options available for which you may qualify. Just remember: the better your credit score, the lower your interest rate. If you need help with improving your score, look at these six simple tips:
- Know your credit score. Your credit card company can often provide your score for free, or your bank should be able to for a small fee.
- Get rid of as much of your credit card debt as possible. Try to keep your credit utilization ratio down to around 30 percent
- Avoid worsening your credit during the application process. If you can avoid it, do not change jobs or make large purchases via credit, like financing a brand-new truck.
- Maintain steady employment. You must be able to hold and prove a reliable income, even if you’re self-employed. Your last two years of income should be at the same level or higher.
- Be diligent about paying your bills on time! Recent late payments can jeopardize your ability to qualify for a VA loan. We get it, you’re busy – set reminders or automatic payments to help stay organized.
- Have you had a recent foreclosure or bankruptcy? If so, you’ll typically need to wait at least two years from discharge/dismissal before applying for a VA loan (plus be able to demonstrate established credit following the foreclosure or bankruptcy). You may be eligible for a VA loan in the middle of Chapter 13 bankruptcy with at least one year of satisfactory payments made and approval of the trustee or bankruptcy judge.
Look for more VA Loan Home Buying Guide blogs in the future helping veterans and active-duty military get the home of their dreams. For more information on how you can secure a VA loan, contact a NASB VA approved lending officer at 1-844-334-4739 or visit here .