After serving your country as a member of the military, readjusting to life as a civilian can be rough. This is especially true for military members with bad credit who may need to find housing but fear that they have no options. Yet, there are lenders who are willing to grant special VA home loans that allow borrowers with bad credit the option of financing a home purchase with bad credit. This article will review the details of these loans and what one needs to do in order to qualify for one.
VA Loans: A History
The U.S. Department of Veterans Affairs, also known as the VA, was established before the country was even founded. Back in 1663, the Pilgrims of Plymouth actually passed a law which guaranteed that any soldier injured in battle with local Pequot Indians would be supported by the colony. Once the country was founded in 1776, those benefits continued and have subsequently expanded throughout the years in reaction to the many conflicts that U.S. armed service members have participated in.
The VA home loan program started following World War II. The idea was to provide a way for veterans and their families to secure housing and fulfill the American Dream of home ownership. The VA essentially insures the loan and gives veterans the advantage of their support when talking to lenders. In addition, should you fall behind on your mortgage payments, the VA can help you out as well, preserving your credit in the future.
Qualifying for a VA Home Loan
In order to qualify for and receive a VA-sponsored home loan, you do not need to be a first time home buyer. There are some other criteria that you need to meet, however. This includes:
- You must be a current or former member of the armed forces, a qualified National Guard or reservist or the surviving spouse of one.
- You must meet income and credit qualifications specified by the VA.
- The home you buy will need to serve as your primary residence.
The details of each lender's credit score qualifications vary. However, regardless of your credit score, income is a major factor in your loan determination, especially among those with bad credit. If you do not have a stable source of income that is large enough to support your mortgage payment along with other debt obligations you cannot qualify for a VA home loan, especially with bad credit.
Finding a VA Home Loan
Home loans that are sponsored by the VA are not offered through the VA itself, but rather through select private lenders who agree to submit to the VA's standards and operate through their rules. It is up to the individual lenders to choose whether or not to extend a loan to you, which includes an assessment of your bad credit score. However, it is important to note that the support of the VA will enhance your home loan application since it gives lenders an additional safety net should you fail to repay your loan properly.
Making the Decision to Buy a Home
Choosing to buy a home, whether through a VA home loan or a traditional home loan is one of the biggest choices of a person's life. There are many factors that go into the assessment for this type of loan which includes an evaluation of your bad credit. Therefore, any additional positives you can offer the lender, such as VA backing, is helpful and can ultimately make the difference between acceptance and rejection.