Credit score for VA loan: Minimum requirements for approval

Your credit score for a VA loan is one of the first factors lenders consider when they review your mortgage application. High scores signal stronger financial responsibility and can improve qualification and lower interest rates. Low credit scores can make the process more challenging. 

VA loan requirements are generally flexible, allowing more veterans, service members, and surviving spouses to buy a home even if they don’t have a perfect credit profile. But minimum credit ratings vary between lenders, and understanding your options helps you seek a loan confidently.

Learn the credit qualifications for a VA loan, the impact they have on your rates, and the other factors lenders examine to approve a mortgage.

What’s the minimum credit score for a VA loan?

VA loans don’t have a set minimum credit score, as The Department of Veterans Affairs (VA) doesn’t require a specific number. But borrowers access these mortgages through private lenders, who can set their own VA loan credit score requirements. This means the ideal credit score changes depending on your chosen provider.

While there’s no fixed number, 620 is a credit score benchmark. Some are willing to approve applications with credit scores around 550–580, provided they have a positive financial profile, like a solid income or reliable debt payment history.

Most of Better’s VA loans have a minimum credit score requirement of 620. Plus, our digital platform makes it easy to browse your options so you can compare rates, find an agent, and discover the best possible loan for your circumstances.

...in as little as 3 minutes – no credit impact

How do credit scores affect VA loan approval odds?

Your approval doesn’t depend solely on credit score — it’s one of several aspects that lenders consider for your VA loan. While a low score won’t automatically disqualify you, it makes providers scrutinize other financial factors more closely.

Here are the three most common credit score ranges and how they affect loan approval:

— Below 580: Some lenders decline applications with a credit score below 580, as they typically signal a high-risk borrower who’s more likely to default. Some providers accept these scores, but they often require a strong compensating profile that includes low debt or high cash reserves. These situations may also require manual underwriting, a process where lenders examine an application personally rather than relying on automated software. This can take extra time, and some providers charge an underwriting fee.

— Between 580–620: This is considered a borderline range. Some lenders will approve in this zone, but usually with specific limitations, such as lower maximum loan amounts or higher interest rates.

— 620 and above: This is the most common credit score needed for a VA home loan. Once you’re over the 620 threshold, you’re likely to get approved for a VA loan with standard underwriting. This is a comfortable level for most lenders and should provide you with favorable mortgage terms, like lower interest rates and monthly payments.

While many lenders have specific VA home loan credit requirements, keep in mind that you can secure a home with no credit score. Providers will rely on other factors to show you’re a reliable borrower, such as a history of on-time rent, utility, and car payments.

How does my credit score affect my VA loan interest rate and terms?

Your credit score impacts your VA loan interest rate significantly. Most lenders offer low rates and financial savings with higher credit scores, seeing them as a reliable investment. On the other hand, if the credit score is low, it signals that the buyer is less likely to repay the debt on time. 

Providers then increase interest rates accordingly so they can offer a mortgage while lowering their own risk. This allows more people to access loans, but it’s still a good idea to aim for higher credit scores for the best long-term savings. 

Let’s take a look at different VA loan interest rates by credit score. Imagine two separate veterans applying for the same 30-year mortgage of $250,000. One borrower has a high credit score of 720 and gets a 4.25% interest rate, while the other has a lower credit score of 600 and ends up with an interest rate of 5.00%.

The difference of 0.75% sounds negligible on paper now. But, over 30 years, the buyer with the 720 credit score pays $192,746 in interest, and the other pays $233,139.

What factors do lenders consider besides my credit score?

While credit scores affect qualification and terms, lenders examine other factors on your loan application to understand your overall financial situation. Here are a few common considerations:

— Debt-to-income ratio (DTI): A DTI ratio shows how much of your gross monthly income goes to paying off current debts (such as car loans, student loans, and credit cards). The VA recommends a DTI of 41% or less. This is flexible compared to the expected 36% limit for conventional loans. This ultimately depends on your chosen lender’s requirements, although many of them use the VA’s guidance.

— Residual income requirements: This is the remaining money you have once you pay for major living expenses and the proposed mortgage costs. The VA examines this to ensure borrowers can comfortably afford necessities along with loan payments. They usually compare your situation with a regional chart to set a minimum threshold based on your family size and location. The VA may disqualify applications if this income is below their guidelines but could make exceptions if borrowers have low debt and cash reserves.

— Employment and income history: Lenders typically ask for proof of a steady income in the past two years, such as pay stubs and tax returns. They want to see financial stability as reassurance you can handle monthly payments. If you recently changed jobs, you can still prove a reliable income. Providers usually accept employer confirmation that you’re likely to stay, especially if your new work is in the same field as your last.

— Past credit history: A record that includes late payments or bankruptcy can raise red flags with lenders. Even if you have an adequate credit score, the provider may ask for specific documents or explanations for the negative credit events.

— Assets and cash reserves: A healthy savings account or liquid assets show providers you have a financial cushion, making them more comfortable approving a VA loan with favorable terms.

How can you improve your credit score for a VA loan?

A low credit score isn’t permanent. You can improve your rating before you apply to help you qualify more easily and secure better terms.

Here are a few ways you can boost your credit score:

— Pay down credit debts: If your credit cards are maxed out each month, try to bring your balance down through larger payments. This improves your credit utilization rate and is one of the faster ways to increase your score. 

— Make payments on time: Settling your debts within recommended guidelines boosts your credit rating. For most credit cards and loans, it’s best to pay the full amount monthly. Many borrowers manage this by setting up automatic payments or simply scheduling regular reminders.

— Hold off on new credit accounts: Every time you apply for a new credit card or loan, your credit score reduces by about 5–10 points. Try to limit your number of new applications and hold on to your old accounts, especially in the few months preceding your VA loan application. This keeps your credit score as high as possible.

How to apply for a VA loan

Every mortgage provider is a little different, but here are the general steps to apply for a VA loan:

— Confirm your eligibility: A Certificate of Eligibility is a document proving you’re qualified for a VA loan. You can request this from the VA online or via mail. You can also ask your lender to help you pull it from the VA’s eBenefits portal.

— Choose a VA-approved lender: Find a VA-authorized mortgage provider. This program has specific guidelines and requires lenders to follow certain regulations to provide the loans. Better is a VA-approved platform, so borrowers can browse, compare, and choose a certified lender confidently.

— Get preapproved: Apply for pre-approval to discover an estimate of how much you can borrow. This number is your finance guideline so you can look for a home to fit that budget.

— Find a property that meets VA requirements: VA loans require an extensive appraisal to ensure it meets Minimum Property Requirements. This guarantees the home is safe, structurally sound, and sanitary. Once you’ve found a property, your lender will help you request and track the appraisal.

— Complete underwriting and close: When you complete all previous steps, your VA lender will review your full application. If everything checks out, you’ll receive a clearance to close. You then need to pay closing costs, which could include the VA funding fee, title services, and appraisal costs.

Secure a transparent VA loan with Better

Understanding the impact of your credit score gives you the upper hand before you apply. Discover your score and improve it before moving forward, or seek a mortgage provider with flexible credit standards. While there’s an average benchmark for a VA mortgage loan, credit score requirements depend on the lender, allowing many borrowers to buy a home regardless of their profile.

Better provides VA loans with clear rates, requirements, and terms. Apply and get pre-approved in as little as three minutes to compare loans and find an agent. Use our convenient dashboard to access 24/7 support, browse an in-depth knowledge base, and track your home buying progress.

Enjoy a smooth path to homeownership with Better.

...in as little as 3 minutes – no credit impact