How Does Your Credit Score Factor into Your VA Home Loan?
The VA Home Loan is one of most beneficial mortgage programs around for members of the military, both past and present. Qualified service members can financing for 100 percent of their home’s value. If the unknowns of your credit score’s effect on your possible interest rate have kept you from applying, fear no more.
It’s time to educate yourself on how your credit score will factor into the program. First off, it is important to know, your credit score will not be a factor in determining your interest rate. Not at all. Feeling better already? Well good. Here are some more facts about the VA Loan program and a borrower’s credit score.
Working with the lender
The Department of Veterans Affairs, or VA, does not finance your mortgage. It acts as a guarantee agency, an insurer, which protects the lender against default. To qualify for this military benefit, the VA states that an applicant must have sustainable income and suitable credit in order to qualify for the program. Once you are qualified, it is up to the lender, which is a private institution, to determine your interest rate and that is when your credit score is looked at.
As the lender goes, so you go. If your lender insists your credit score is 590 to be accepted, then you will need a score of 590. If your lender wants you to have a 620, then you will need a 620. Years ago, Congress required credit agencies to make available to consumers one free credit report per year. This means, you can see what is on your report and it is recommended that you do so. There are websites that will help you obtain your report from each of the 3 agencies (Experian, Equifacts, and TransUnion). The most popular of these sites is AnnualCreditReport.com.
Research your own credit before applying for a VA Mortgage
Once you get your credit report, comb it over and check for any errors. If you find an error, dispute it immediately directly with the credit agency. Each of these agencies have steps listed on their websites for disputing items on your credit report. After you’ve insured your financial situation is as solid as possible, you are at the best time to apply for your VA Home Loan.
VA Home Mortgage Facts
- Once you qualify for a VA Loan through the Department of Veteran Affairs, you must still get approved by your private lender
- The VA is not your lender, they insure the loan in the event of default, as a guarantor agency
- Because of the VA’s backing, borrowers are able to finance up to 100 percent of the home’s price
- The only stipulation is you may not use the home as a rental
- There are several kinds of homes that may qualify under this program, including:
- Newly built homes
- Detached homes
- Manufactured homes
If you have read enough and are excited to get going on this process, connect with one of the many lenders in the Veterans Authority network and get started today.