Getting a VA Loan With a Low Credit Score in 2023

Getting a mortgage with a low credit score can feel daunting. Many homebuyers assume that poor credit automatically disqualifies them from homeownership. However, VA loans offer more flexible credit requirements than conventional mortgages. With a VA loan, you may be able to buy a home even with a low credit score.

In this comprehensive guide, we’ll cover everything you need to know about getting a VA loan with a low credit score. We’ll look at:

• VA credit score requirements compared to conventional loans
• Typical minimum credit scores for VA lenders
• VA loan approval odds by credit score range
• Tips for improving your credit score
• Alternatives if your score is too low for a VA loan

Let’s start by looking at the credit standards for VA loans versus conventional mortgages.

VA Loan Credit Score Requirements vs Conventional Loans

The Department of Veterans Affairs, which backs VA loans, does not set a minimum credit score. They rely on lenders to assess if borrowers meet credit standards.

Most lenders require a minimum FICO score of 620 for VA loans. Some may approve scores as low as 580.

Meanwhile conventional mortgages commonly require credit scores of 620-680. Many conventional lenders prefer scores above 700.

So while VA loans offer more flexible credit standards, you still need decent credit. A very low score below 580 will make approval difficult.

VA loans offer more lenient credit requirements because they are government-backed. The VA guarantees a portion of the loan, reducing lenders’ risk. This allows them to accept lower scores.

Conventional loans lack that government guarantee. So lenders impose stricter standards to minimize their risk.

Now let’s look at specific credit score requirements from top VA lenders.

Minimum Credit Scores for Top VA Lenders

While the VA doesn’t enforce credit score minimums, individual lenders set their own requirements. Here are some examples of credit score cutoffs for top national VA lenders in 2023:

• Veterans United – 620 minimum
• Navy Federal Credit Union – 620 minimum
• Quicken Loans – 600 minimum
• loanDepot – 550 minimum
• Freedom Mortgage – 640 minimum

As you can see, many lenders stick to the 620 range. But some allow scores as low as 550.

Minimums also depend on other factors like your debt-to-income ratio and down payment amount. Weaker applicants may need higher scores. Strong applicants can sometimes get approved with lower scores.

VA Loan Approval Odds by Credit Score

Wondering about your personal odds of getting a VA loan based on your credit score? This chart shows VA loan approval percentages for different credit score ranges among 2022 borrowers:

As you can see, applicants with scores below 580 face tough odds. But approval chances increase significantly once you reach the 580-619 range.

Scores of 620+ receive high approval rates. So if you can boost your score to the low 600s, you should have a decent shot at a VA loan.

How to Improve Your Credit Score for a VA Loan

If your credit score falls short of lender minimums, take steps to boost it. Here are some tips:

• Pay all bills on time. Payment history is the biggest factor in your credit score. Pay all debts on time going forward.

• Pay down credit card balances. High balances hurt your credit utilization rate. Pay down cards to below 30% of the limit.

• Avoid new credit applications. Each application causes a hard inquiry that dings your score. Hold off on applying for new credit.

• Check for errors on your credit reports. Errors can drag down your score. Review reports and dispute any mistakes.

• Consider credit counseling. Reputable credit counseling agencies can help create a plan to improve your credit.

With diligence and smart credit management, you may be able to raise your score enough to qualify in just a few months.

Alternatives if Your Credit Score is Too Low for a VA Loan

If your credit score is very low, a VA loan may be out of reach for now. In that case, you have a few options:

• Improve your credit, then reapply for a VA loan in 6-12 months
• Apply with a co-signer who has good credit to boost your chances
• Explore FHA loans which offer low down payments and allow scores as low as 500
• Save up for a larger down payment to offset credit risk
• Consider renting until you can improve your credit and financial profile

The good news is VA loans make it possible to buy a home with less-than-perfect credit. Scores in the fair range (580-669) can often still get approved. With diligence, VA homeownership may be within your reach.