For former members of the military, the challenge of adjusting to civilian life can be quite acute. It is common to see those who have left military service, either because they finished their career, suffered a disability or simply decided to retire, fight. But when buying a home, the availability of bad credit VA home loans means there is a financing option available to them.
The military holds a special place in the lending industry, with a variety of incentives offered to current and former members seeking loan funds for any reason. But securing VA mortgage approval depends on more than just membership.
So what are the criteria needed to secure approval for a VA home loan? What can be done to increase your chances and where can you get them? Here are some factors that address those questions.
Qualifying for VA Financing
Those who qualify for VA funding are former members of the military. But that’s not to say that any former member gets the green light. Securing a VA home loan with bad credit comes down to meeting 3 key conditions.
Because those seeking VA mortgage approval often have income that is not related to the military, it is highly likely that they have had bad financial experiences. The VA wants to be sure that they are not bearing a significant financial risk.
As a result, applicants cannot have defaulted on a loan in the previous year, cannot have bankruptcies filed within the previous 2 years, and must have proof of gainful employment. Once these criteria are met, then a VA home loan is on the cards.
Other considerations
The definition of ex-military is not as clear cut as it seems, with those unable to serve due to a disability included in the group, at least by VA. As a result, people who are currently disabled or receiving benefits can apply for a VA home loan with poor credit.
As with any loan, taking steps to improve your credit score (even marginally) can make a big difference in your chances of getting VA mortgage approval. The best way to do this is to pay off some existing debt, or at least stay current on credit card and other bills. It may be worth taking out some small personal loans to deal with individual debts.
The advantage to shopping for a VA home loan is that with each debt paid off, your credit score increases and your debt-to-income ratio improves. Relationship is the key factor in any loan application. Get that right and approval is almost guaranteed.
Where to get a VA home loan
Despite the title of the loan product, the VA does not actually make a VA home loan. They only offer their support to the applicant, while the mortgage provider actually provides the financing. For this reason, it is necessary to find a suitable online lender to obtain the best possible terms.
However, the fact that the VA is willing to sponsor the applicant means that the guaranteed terms can be very good, especially since the interest rates are lower. But getting a VA home loan with bad credit generally means no down payment is needed, and the VA also guarantees 25% of the mortgage.
With a reduced level of risk, lenders are happy to grant the mortgage. Still, look for certified VA mortgage loan providers. These are trusted partners of the VA, which reduces the risk of being taken advantage of and offers a higher chance of VA mortgage approval.