Home Purchase Most Popular Articles

VA Loan Resources

  • Girl with space shuttle toy
    Data Suggests VA Loan Qualifying isn’t Rocket Science
    Veterans First Mortgage ®
    When it comes to getting approved, VA-eligible borrowers may currently have a slight edge.
  • Home Loans
    VA Loan Guide
    The VA program is one of the few remaining no-down payment programs in the market. Learn all about using your VA loan benefit.
  • Serviceman and son
    Understanding VA Home Loan Requirements
    Navy Federal Credit Union
    If you’re looking to buy, refinance or remodel your home, then be sure to review VA home loan requirements to see if you qualify.
  • VA home loan. Getty Images
    VA Home Loan: Do You Have What it Takes?
    There are five categories for eligibility. Your eligibility is based on you military service. Do you meet the criteria?
  • Family playing in yard
    5 Reasons to Live Off Base
    There are a lot of factors that play into your decision on whether to live inside or outside the base gates, and there's no bla...
  • Printout of a credit report
    Starting the Loan Application Process
    Once you've determined that you are eligible for a VA home loan, you can begin the loan application process, which includes six...
  • US Map Showing High Cost Counties
    VA Loan Limits for High-Cost Counties: Updated for 2017
    The VA loan limit for 2017 is $424,100. But it could actually be substantially more if you buy a home in a high-cost county. Se...
  • Couple looking at tablet
    How to PCS in a Hurry
    In a perfect world, military families get orders to their new locations months before the report date. In reality, things are h...
  • Family outside suburban house.
    VA Financing & Mortgages Options
    The VA guarantees a variety of home loans. There are two basic types of loans with two additional options that are appealing to...
  • gray home
    What Is a VA Guaranteed Home Loan?
    If you want to purchase or refinance a home, condominium or manufactured home, the VA can guarantee up to $417,000 of the total...
  • Home buying. Getty Images
    Top 3 VA Home Loan Tips
    We've scoured the Internet to find the three most helpful tips to help you take advantage of this exclusive benefit.
  • Business writing
    VA Loan Forms
    In order to receive your Certificate of Eligibility for VA loan benefits, you will need to submit your request for a Certificat...
  • big gray house
    6 Unbeatable Benefits of VA Loans
    Veterans United Home Loans|
    Here's a look at six of the biggest, most unbeatable benefits of the VA home loan.

The VA Credit Alternative

hand full of cash

Gone are the days when practically anyone could get a mortgage (thank goodness) regardless of credit history, income or any documentation whatsoever. That short lived fad didn't last very long but it certainly took a toll on our economy. Yes, those loans and the lenders that made them are gone but the effects are still here.

VA loans however have been around since 1944 in some form or fashion and even though they don't require any money down from the borrower, they outperform all other mortgage programs in the market today by implementing the same VA loan guidelines over the years. Yes, VA rules have been tweaked to adapt to the current market but overall, the VA loan program has been a stalwart in the mortgage industry. And that includes how it views the credit history of the borrower.

VA Credit Reports

Like other industries, the credit reporting business and the way VA lenders evaluate a credit application have changed over the decades. Up until about 1998 when credit scores began making their way into a mortgage lender's approval process, credit reports were reviewed manually.

A lender would order a credit report and line by line review the amounts owed, the monthly payments and payment history, noting any late payments or collection accounts.

As credit scores evolved, soon VA lenders required a minimum credit score, with many VA lenders asking for a minimum 620 score.

Credit scores are calculated based upon the recent credit history of the borrower and is an algorithm that reviews payment history, available credit, credit inquiries, types of credit and length of the credit history. This three digit number ranges as low as 300 to as high as 850, the higher the score, the better the credit. A VA mortgage credit report will have three scores, one from each of the primary credit repositories, Experian, Equifax and TransUnion. VA lenders will use the middle score.

But what if the borrower has no credit history or very little? What happens?

Alternative Credit

VA lenders typically require at least three trade lines verified to show timely payment. There are traditional and alternative credit types. Traditional trade lines are reported on a credit report identifying the creditor and the payment history.

Alternative credit identifies other monthly obligations a borrower might have that will not be reported on a credit report.

Alternative credit can be established by providing evidence of timely payment to a phone company, the electric or water company or even automobile insurance. VA guidelines can accept alternative credit as long as there is at least a one year history of verified timely payments.

For example, a borrower using alternative credit to help qualify for a VA home loan can provide a 12 month statement from the electric company or water utility showing a payment history. Any regular monthly obligation can be considered when using alternative credit.

It's important to note here that while the VA doesn't have any minimum trade line requirements; most lenders do ask that at least two trade lines appear on a credit report. Once those two are verified, then alternative credit may be considered.

The VA knows that a credit report won't entirely tell the story of a borrower, especially someone who is just starting out in the consumer world. VA loans have the lowest default rate of any program, having good credit verified is essential in holding that special status.

[Asset Included(Id:7000023428834;Type:maComponent)]