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You Don’t Need Perfect Credit to Get a VA Loan in California

This article is part of an ongoing series through which we are educating California home buyers about the VA loan program. This program is open to many military members and veterans.

In previous articles, we explained how you don’t need a down payment when using this program, and how it can help you avoid mortgage insurance.

Today, we will talk about credit scores and how they tie into all of this. The short version is that you don’t need perfect credit to qualify for a VA loan in California. In fact, this is one of the easiest mortgage programs to qualify for, and we will explain why in just a moment.

Have questions? Bridgepoint Funding specializes in the VA loan program and serves borrowers all across the state of California. Please contact us if you have questions about anything covered in this article, or about the VA mortgage program in general.

VA Loans For California Home Buyers

Military members earn certain benefits for their service. The G.I. program is one example, as it helps service members cover the cost of college tuition. The VA home loan program is another powerful benefit for military folks in California. Through this program, eligible borrowers can purchase a home with no money down.

The zero down payment option is arguably the biggest benefit of using a VA loan. But there are other benefits as well. This program allows borrowers to avoid mortgage insurance and offers very flexible qualification criteria, when compared to conventional loans.

Among other things, this means you don’t need “perfect” credit to qualify for a VA loan in California. So let’s zero in on this particular benefit…

More Lenient Requirements for Credit Scores

A credit score is a three-digit number based on the information found within a person’s credit reports. Banks and lenders use these scores as a kind of risk indicator. People who pay all of their bills on time tend to have higher credit scores, while those with a history of missed payments or delinquencies have lower scores.

When it comes to the mortgage loan process, your credit score matters for a couple of reasons:

  • First of all, it can either help or hurt your chances of qualifying for a mortgage loan. Applicants with higher scores tend to have an easier time qualifying for mortgage loans, due to the risk-related factors mentioned above.
  • A good score can also help you qualify for a better interest rate, which could save you a lot of money over the life of the loan.

But getting back to the VA home loan program. Home buyers in California can often qualify for a VA loan even if their credit scores are a bit too low for a conventional loan. To understand why, you have to understand how this program works.

Mortgage lenders that offer VA loans to borrowers receive a partial guarantee from the federal government. This guarantee offers a degree of protection from losses relating to borrower default, or failure to repay.

Because of this guaranty, mortgage lenders can offer very flexible qualification criteria for VA loans, and that applies to credit scores as well. If you currently have a decent credit score, along with the ability to repay the loan, you could qualify for a VA loan. This is true even if you’ve had credit-related issues in the past.

The bottom line is that borrowers should not assume their scores are too low to qualify for a VA loan. You have nothing to lose by speaking to an approved mortgage lender, to find out where you stand. And you might find that you are well-qualified for this program, even if your credit score is a bit below average.

How to Apply for the Program

If you are a military member in good standing, or a veteran who has received an honorable discharge, there’s a very good chance you are qualified for the VA loan program. Elsewhere on a website, you can find a full list of the eligibility requirements. We can also help you determine your eligibility, if you require assistance.

Once you’ve obtained a “Certificate of Eligibility” from the Department of Veterans Affairs, the mortgage process proceeds as it would with any other type of loan. You can get pre-approved to find out how much you are able to borrow. After that, you could begin the house hunting process and make an offer when the right property comes along.

We can help you with all of the mortgage-related steps in this process. As mentioned above, our company specializes in the VA loan program and loves to work with military members and veterans. It’s our small way of giving something back to the people who have given so much for their country. So please contact us if you have questions about VA loans, credit score requirements, or any other aspect of the program.

Mike Trejo

Mike Trejo is a Bay Area mortgage broker with 20+ years of knowledge and experience.

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