Average Credit Score Among VA Loan Borrowers in California

This article examines the average credit score among VA loans in California and nationwide. Credit scores are just one of several requirements for the VA loan program. Please contact us if you have questions about qualifying.

The Department of Veterans Affairs home loan guarantee program is very popular among military members and veterans in California. And it’s easy to understand why.

This loan program allows eligible borrowers to purchase a house with no money down, while avoiding mortgage insurance at the same time. Those are two very big benefits for home buyers, especially those with limited funds in the bank.

Basic Requirements for Borrowers

California VA loan requirements can vary from one mortgage lender to the next. Some rules and guidelines come from the Department of Veterans Affairs, while others are imposed by individual mortgage companies and banks.

With that being said, most lenders have similar requirements for VA loans in California and nationwide. The credit score is one of those commonly used criteria.

There is no official minimum credit score for VA loans in California. Generally speaking, mortgage lenders tend to set the bar somewhere in the low-600 range. That means if your credit score falls well below that level, you might have trouble qualifying for a VA loan.

On the other hand, if you have a credit score that falls within the low-600 range or higher, you could be well-qualified for a VA loan.

These scores aren’t the only requirement for VA loans. Borrowers must also document their monthly income. You must have sufficient income to keep up with your monthly mortgage payments, along with all of your other recurring monthly expenses.

You’ll also need to have enough money in the bank to cover the closing costs associated with your loan. Most California home buyers encounter closing costs when making a purchase. This is true for VA, FHA and conventional loans alike. Having sufficient funds to cover these costs is another key requirement for VA loans in California.

Average VA Loan Credit Score: Summer 2020 Update

But let’s get back to credit scores for a moment. A recent report revealed that the average credit score for VA purchase loans in California and nationwide was 721. This is based on the “Origination Insight Report” produced by Ellie Mae.

Ellie Mae is a software company that serves the mortgage industry. A large number of home loans are processed using their software. Their insight reports examine all of those loans to identify key trends, including the average credit score among borrowers in different loan categories.

Here are some quick statistics from their latest report, which covers June 2020:

• The average credit score for VA loans used by home buyers was 721.
• The average score for VA refinance loans was 733.
• The average credit score for a conventional purchase loan was 756.

(Note: These are just averages. You could qualify for the program with a score below this level.)

It’s interesting to note here that borrowers who use conventional loans to buy a house have higher credit scores, on average, than those who use the VA program. That’s logical, when you consider the nature of the program.

VA loans are unique in that they offer a degree of federal assurance and protection to the lenders who generate them. So it’s only logical that lenders would be more flexible with their credit-score requirements and other criteria when approving VA loan applicants.

According to Ellie Mae’s recent report, the average debt-to-income ratio was also higher for VA loans, when compared to conventional mortgages. That means VA loan applicants are getting approved with higher levels of debt (on average) compared to those seeking a conventional / non-government-backed mortgage product.

Related: Max loan amount for this program

One of the Most Flexible Options for Borrowers

The numbers above show the average credit score for VA loans in California and nationwide, across all borrowers. But that is not the minimum required score to qualify for a VA loan.

As mentioned earlier, it’s possible to qualify for this program with a credit score down into the low-600 range, or possibly even lower in some cases. The credit score is one of many factors a lender will look at when considering you for a VA loan in California.

The bottom line is that Department of Veterans Affairs home loans are one of the easiest types of mortgages to qualify for, in addition to the other benefits like zero down payment. If you’re a military member or veteran in California, you might qualify for the VA loan program.

Most military folks are eligible for it. Elsewhere on this website, we’ve written an article that explains the eligibility requirements.

Does Your Credit Score Measure up?

Is your credit score good enough to qualify for a VA loan in California? Do you meet the other requirements for this particular program? We would be happy to review your situation to determine if you’re an eligible borrower.

Bridgepoint Funding specializes in California VA loans. We are passionate about this program because it rewards our brave men and women in uniform. It is arguably the best financing option for California military members and veterans who qualify.

Contact us today! Our knowledgeable staff can answer any questions you have about qualifying for a VA loan in California, including credit-score requirements and other eligibility criteria. We look forward to helping you.