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Are you a veteran or military active-duty personnel? Do you want to buy a home but don’t have the fund for that? Then, you can apply for a VA loan program and fulfill your dream. It is a loan program issued by a private lender, such as a mortgage company or a lender, and is partly guarded by the Department of the Veteran Affairs. This guarantee means that the government will repay the lender a part of a loan if the borrower fails to make the payment.
And as there are several companies that offer VA home loans, getting this home loan will not be difficult for you. However, you need to keep in mind that your credit score can impact your VA loan program. So, before you apply for a VA loan, know how your credit score will factor into the program.
Your credit score plays a crucial role in your home loan program. These programs often need a specific minimum amount to be approved for a loan. For example, FHA loans will likely require home buyers to have a credit score that is above 500. Technically speaking, VA loans don’t have a minimum credit score requirement. But the VA will not give you the loan – the process will be completed through a lender. Each lender has his or her own set of standards, even with credit scores. Generally, VA mortgage loan programs start with 500+ credit scores. However, some lenders ask for more credit score to approve the loan. It can vary based on the personal situation of each buyer. But to be clear, VA home buyers should maintain a minimum credit score for VA loan. If the score is lower, it can be difficult to get a lender willing to approve the loan. If you have a high credit score, particularly 680 or more than that, you will not have to face any issue to get your mortgage loan approved. At least, your credit score will not work as a barrier during the application process.
Getting the best rate
When your credit score is high enough to get your loan approved, there is another thing that you have to worry about, and it is the mortgage rate. There is not a particular mortgage rate for a home loan; however, that does mean the rates change every day. Actually, the rate that lenders give change from borrower to borrower. Two people can apply for a VA loan at the same time, but they will get two different rates. In fact, mortgage lenders have a specific chart that categorizes what mortgage rate a buyer will get based on his or her credit score. It also takes into account the loan to value or how much money is being borrowed. So, in order to get the lowest mortgage rate available, VA buyers need to have higher credit scores.
So, if you want to apply for a VA home loan program, you should maintain a minimum credit score to get the loan quickly and at the lowest mortgage rate from the lender.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.