VA Loan Credit Score Requirements: Minimums and Options

Does the VA set a minimum credit score?

No. On its entitlement and loan limits page, VA says: “We don’t require a minimum credit score, but some lenders do have a requirement, so be sure to contact more than one lender to compare.”

What VA does require is that you be a “satisfactory credit risk.” The credit standards in 38 CFR 36.4340(g) tell underwriters to read the full credit history: how you have paid over time, why problems happened, and whether you have recovered. VA also requires lenders to test your income two ways, with a 41% debt-to-income benchmark and a residual income test. A borrower with a 600 score, steady income and strong residual income can be a better VA risk than one with a 680 score and a stretched budget.

You also need a Certificate of Eligibility (COE) based on your service. A COE confirms you can use the benefit. It says nothing about credit, and your lender still has to approve the loan.

Minimum credit score for a VA loan: typical lender minimums

Because VA leaves the score to the lender, the minimum credit score for a VA loan depends on whom you ask. Three things drive the differences:

• Investor rules. Most VA loans are sold into Ginnie Mae securities, and the investors and servicers who buy them set floors to manage default risk.
• Manual underwriting capacity. Below about 620, automated systems often return a “Refer” instead of an approval. Lenders that do not keep experienced manual underwriters simply set a higher floor.
• Program layering. Some lenders set different minimums for purchase, cash-out refinance and jumbo VA loans.

When you compare lenders, ask two direct questions: “What is your minimum score for a VA purchase loan?” and “Do you manually underwrite VA files that get a Refer?”

Getting a VA loan with bad credit (580s and below)

Can you get a VA loan with a 580 credit score? Yes, with the right lender and a file that shows recovery. A VA loan with bad credit usually comes down to what an underwriter can document. VA lists compensating factors in 38 CFR 36.4340(c)(5), and these are the ones that most often carry a lower-score file:

• High residual income. Money left over each month after housing, debts and taxes. VA’s guideline for a Texas or Oklahoma family of four is $1,003 a month on a loan of $80,000 or more; for Colorado it is $1,117.
• Low debt-to-income ratio, well under the 41% benchmark.
• Little or no increase in housing cost compared with your current rent.
• Long-term employment and military benefits that will continue.
• Significant liquid assets after closing.
• Conservative use of consumer credit since the problems ended.

A score in the 500s is harder. VA has no floor, but few lenders will go there, and those that do will want 12 months of clean payments, documented reasons for past problems and strong residual income. If your low score comes from high card balances rather than late payments, a few months of paying down balances can move you into a much larger pool of lenders.

No credit at all is a different case. VA says a missing credit history, common for recently separated service members, does not by itself prevent a finding of satisfactory credit. Lenders can use rent, utilities, insurance and other payment records instead.

Worked example: what the score costs on a Killeen purchase

A first-time VA buyer purchases a $300,000 home near Fort Hood with no down payment. The 2.15% funding fee ($6,450) is financed, for a loan of $306,450. The rates below are illustrative only, to show how score-based pricing can change the payment.

Add an assumed 2.2% Bell County effective tax rate ($550 a month) and $200 a month for homeowners insurance, and the full payment at 6.75% is about $2,738. A disabled veteran would pay no funding fee and may qualify for a Texas property tax exemption, which can change the numbers a lot. Use Herring’s Texas VA loan page to see current program details.

Waiting periods after bankruptcy, foreclosure and short sale

VA’s regulation describes these as underwriting judgments rather than fixed timers, but in practice they translate into the waiting periods below.

VA also says divorce is generally not considered a circumstance beyond your control. If a bankruptcy followed a divorce, expect the lender to want the full two years and solid payment history since.

Collections, charge-offs and CAIVRS

Collections. Under 38 CFR 36.4340(g)(1), if the underwriter finds you are a satisfactory credit risk, a collection account does not have to be paid before closing. Paying it off right before you apply does not erase the late history either, because VA looks at how debts were handled when they were due.

Judgments. Court-ordered judgments must be paid off before a new VA loan is approved.

Federal debts and CAIVRS. You cannot be approved while you are delinquent or in default on a debt to the federal government, such as a federal student loan, an SBA loan or a prior agency claim. Lenders screen applicants through HUD’s Credit Alert Verification Reporting System (CAIVRS). The fix is to bring the account current or set up a repayment arrangement with the agency, then provide the clearance letter.

Re-established credit. Outside of bankruptcy, VA generally treats credit as re-established after 12 months of satisfactory payments following the last derogatory item. That 12-month mark is the most useful date to know when you plan your application.

How your credit score affects a VA rate

VA loans do not carry the loan-level price adjustments that Fannie Mae and Freddie Mac apply to conventional loans, and VA does not set rates. Lenders still price by score because investors pay less for loans with lower scores. The effect is usually smaller than on a conventional loan, but the table above shows how a half-point or full-point difference adds up.

Lenders use FICO models from all three bureaus and take the middle of your three scores. On a joint application, most use the lower of the two borrowers’ middle scores. The free scores in banking apps are often VantageScore or a different FICO version, so expect your mortgage score to differ by a few points either way.

How to raise your score before you apply

1. Pull all three reports at AnnualCreditReport.com and dispute errors. The CFPB explains how disputes work; bureaus generally must investigate within 30 days.
2. Pay revolving balances down before the statement closing date. Utilization is recalculated every month, so this is the fastest lever.
3. Keep paid-off cards open to protect your available credit and account age.
4. Avoid new credit for six months before applying.
5. Bring federal debts current and get a written clearance if CAIVRS flags you.
6. Ask about a rapid rescore once a balance is paid or an error is corrected.
7. Build 12 clean months after your last late payment or collection if you can wait.

For more tactics, see Herring’s guides on how to buy a house with bad credit and the credit score needed to buy a house in Texas.

Texas veterans: VA loan vs. Texas Vet loan credit rules

Texas veterans have a second option through the Texas Veterans Land Board. Its Veterans Housing Assistance Program offers fixed-rate loans up to $832,750 with 15- to 30-year terms, and veterans with a VA service-connected disability rating of 30% or more qualify for a discounted rate.

Because a Texas Vet loan still goes through a participating lender’s underwriting, credit needs are usually similar to a standard VA loan. Our guide on how to get a VA loan in Texas covers both paths, and Colorado buyers can see Herring’s Colorado VA loans. Once you know your score, the next number to check is your VA debt-to-income ratio and residual income.