VA Loan Credit Requirements

VA loan credit requirements are easier than conventional loan credit requirements. Past credit performance is considered a useful guide in determining an individual's future actions. An individual who has made payments on past or current obligations in a timely manner represents reduced risk. Conversely, if the credit report shows continuous slow payments, judgments, and delinquent accounts, VA will require compensating factors and a reasonable explanation of the reason for the late payments.

Generally, a 1 year period of acceptable credit will be required for your VA loan. Four or more "trade lines" are required, but if you have not developed a credit history, "alternative" credit verification will be used. Alternative credit sources may include:

Utility Payments
Rental Payments
Automobile Insurance Payments
Telephone or other Payments

The following are VA loan credit guidelines

Previous rental or mortgage payment history Your payment history is reviewed for the previous 12 months.

Recent and/or undisclosed debts A satisfactory explanation of new credit or inquiries will be required.

Collections are not required to be paid prior to loan approval if mitigating factors are present

Judgements will be required to be paid before your loan closes.

Chapter 7 Bankruptcy will not disqualify you if 24 months from the Discharge Date has passed and you have reestablished credit. FHA will consider a loan after 12 months if you can document the bankruptcy was caused by events beyond your control.

Chapter 13 Bankruptcy is allowed after 12 months of the pay out period has elapsed with court approval.

Previous mortgage foreclosure will be allowed after three years. In rare cases, an exception may be granted with very well documented extenuating circumstances after 2 years.

Government loan programs really are more lenient than conventional.