Applying for a VA Home Loan with Bad Credit
Considering the reality that most bankers make getting VA home loans with bad credit close to impossible, you will want to acquire a mortgage through the Federal Housing Administration (FHA). You can make HFA your safe haven when your bad credit score of between 500 and 620 disqualifies you from getting conventional mortgages. These loans are granted with a down payment of nothing less than 3.5%.
However, you should recognize the reality that it is independent banks rather than FHA, which issue loans. FHA simply steps in to insure a certain percentage of your mortgage in case you default payment. Therefore, to remain attractive to lenders and benefit from FHA, you should maintain a sustainable decent income for at least two years.
Explaining the bad credit scores to potential lenders will help you to get this crucial loan when you need it. You can defend your justification using your recent receipts; at least 12 months backwards, of on-time payments of your bills. You could also revise your credit history and explain the reasons for delayed payments of student or medical loans as a result on unstable jobs or medical conditions.
Considering a lease to own or rent agreement is another alternative for getting VA home loans with bad credit. This agreement via your realtor is extremely useful when you are neither fit for traditional nor FHA home loans. Normally, whereas a given percentage of the lease is presumed to be rent payment, the remaining percentage is considered as a payment towards purchase of the home. Although it is tough to get this agreement, a realtor or a willing home-owner can simplify your work and hence make it possible for you to get the home in form of a loan.
This contract is profitable when you have bad credit since apart from giving you the opportunity to try using the home before purchasing it, you are able to repair your ruined credit score and save enough money for the down payment of the mortgage.
The Co-signers aid in getting VA home loans with bad credit. You simply need to identify a family member or close associate whose credit score is unquestionably good to co-sign for the mortgage on your behalf. Even so, you should be cautious enough not to co-sign up for a loan that will be too much for you to pay. This is because many individuals lose their homes within the first year of acquiring them for the reason that they received a mortgage that way extremely high for their budget. Furthermore, you might ruin the close ties with your associates if you are unable to clear the debts in time.
With these few tips, you can successfully apply for a home loan even when your credit scores are bad.