VA Loan Requirements Credit Score: What Veterans Need to Know in 2025

Here’s some exciting news about VA loan requirements credit score that more veterans need to hear. I get calls every single day from veterans who think they can’t qualify for their VA loan benefit because of their credit score. Had a Navy vet call me yesterday who thought he needed a 620 credit score because some website told him that. I got to share some really good news with him.

The truth is way better than most veterans realize, and once you understand how this actually works, you’ll see why so many more veterans can achieve homeownership than they think.

Key Takeaways

• The VA sets zero credit score requirements – this opens doors for so many veterans
• Most lenders want at least 620, but I regularly help veterans with scores in the 580s and sometimes lower get approved
• Your credit score affects your rate, but it doesn’t have to stop you from buying a home
• Many veterans think they need perfect credit when they really don’t, and once they learn the truth, they can move forward
• Below 620? You’ve got more options than you think – let me show you how this works

Why Credit Scores Matter for VA Home Loans But Aren’t Everything

Your credit score tells lenders how you’ve handled credit in the past. It’s like a report card for your financial habits. Pay your bills on time, keep your balances low, and your score goes up. Miss payments or max out your credit cards, and it goes down.

But here’s what most people don’t get about VA loan requirements credit score specifically, and this is the exciting part. The VA guarantees a portion of your loan to the lender. That guarantee reduces the lender’s risk, which means they can be more flexible with credit score requirements than they would be with conventional loans.

I’ve seen veterans with 580 credit scores get approved when they wouldn’t have qualified for a conventional loan. The VA backing makes lenders more willing to work with borrowers who have less-than-perfect credit, and that opens doors for so many veterans.

That said, your credit score still affects your interest rate. A veteran with a 780 score will get a better rate than someone with a 620. The difference might be a half a percent or more, but you’re still getting a VA loan with zero down payment and no PMI.

What the VA Actually Requires vs What Lenders Want

This is the exciting part that changes everything for veterans. The Department of Veterans Affairs sets zero credit score requirements for VA loans. None. Zero. That’s straight from the VA’s own guidelines, and it means the door is open for way more veterans than most people realize.

But here’s how it works. The VA doesn’t make loans. Private lenders do. And those lenders can set their own VA loan requirements credit score based on their comfort level with risk.

What Credit Score is Needed for a VA Home Loan?

The real answer depends on which lender you’re working with, and here’s where it gets even more exciting. Most VA lenders I work with want to see a minimum credit score of 620. Some will go as low as 580. But here’s what many veterans don’t know – some lenders will actually work with scores as low as 500 as long as you have a clean payment history in the past twelve months and no derogatory information from collections or charge-offs within the previous twelve months.

For veterans without a credit score at all, there are alternative tradeline programs specifically designed to help you establish the credit history lenders need to see. These programs look at things like rent payments, utility bills, and cell phone payments to demonstrate your creditworthiness.

The 620 number isn’t random. It’s tied to the secondary mortgage market. Most lenders sell their loans to other investors or loan servicers after closing, and they prefer to see credit scores of 620 or higher. So lenders use that as their benchmark.

But remember, that’s just most lenders. Not all of them. If you’re sitting at 600 or 610, don’t give up. Shop around. Different lenders have different appetites for risk.

I had a Marine veteran last month with a 595 score. The first lender he tried turned him down immediately. We were able to say “yes,” and we closed his loan in 30 days. Same income, same debts, same everything. Just a different lender with different VA home loan credit score requirements. He was thrilled to find out he could still use his benefit.

Getting Approved with Lower Credit Scores

If your credit score needed for VA home loan approval is below that 620 mark, you’ve got more options than you might think. You just need to understand how the process works and what lenders are looking for.

First, your loan might go through manual underwriting instead of automated approval. That’s actually a good thing. It means a human being will review your file instead of a computer algorithm, and they can see the whole picture of your financial situation.

Manual underwriting lets you tell your story. Maybe you had some late payments because of a deployment or a medical issue. An underwriter can look at the context and make a decision based on your overall financial picture, not just a number. I’ve seen this work out really well for veterans who thought they were out of options.

Requirements for Manual Underwriting

For manual underwriting, most lenders want to see at least a 580 credit score. But even then, there are exceptions. Strong income, low debt, significant savings, stable employment history – these all help offset a lower credit score.

Some lenders will also ask for additional documentation:

• 12 months of on-time rent payments
• Proof of utility and cell phone bill payments on time
• Alternative credit history documentation

This is called alternative credit history, and it can help demonstrate that you’re responsible with money even if your credit score doesn’t reflect it. For veterans without any credit score, alternative tradeline programs specifically designed for VA loans can establish the credit history lenders need to see.

The key is being upfront about your situation. Don’t try to hide anything. Lenders can see everything anyway, and being honest about challenges shows integrity. Plus, there are more options available than most veterans realize.

How Your Credit Score Affects Your Interest Rate

Even if you qualify for a VA loan with a lower credit score, you’ll probably pay a higher interest rate. That’s just how lending works. Higher risk equals higher rates.

The difference might be anywhere from an eighth of a point to half a point or more, depending on your score. On a $300,000 loan, that could mean an extra $75 to $150 per month in payments.

But put that in perspective. You’re still getting a VA loan with zero down payment and no private mortgage insurance. Even with a slightly higher rate, you’re probably saving money compared to a conventional loan.

I always tell veterans to focus on getting approved first, then worry about optimizing the rate. You can always refinance later once you’ve improved your credit score. The VA streamline refinance program makes that easy and affordable.

Can You Get a VA Loan with a 580 Credit Score?

Absolutely. I closed a loan last quarter for an Army veteran with a 583 credit score. It required manual underwriting and took about 35 days, but he got approved with a competitive rate and zero down payment.

Can You Get a VA Loan with a 500 Credit Score?

This might surprise you, but yes – some lenders will work with veterans who have 500 credit scores. The key requirements are having a clean payment history for the past twelve months and no collections or charge-offs within the previous twelve months. It’s not every lender, but these options exist specifically because of the VA guarantee.

What if You Don’t Have a Credit Score at All?

Even more exciting news – veterans without any credit score can still qualify through alternative tradeline programs. These programs look at your payment history for:

• Rent payments
• Utility bills
• Cell phone payments
• Insurance payments
• Other regular monthly obligations

If you’ve been paying these bills on time for at least 12 months, you can demonstrate creditworthiness even without traditional credit accounts.

Minimum Credit Score for VA Home Loan Success

While the VA sets no minimum, here’s what I typically see:

• 620+: Most lenders will work with you easily
• 580-619: Need to shop around, possible manual underwriting
• 500-579: Limited lenders, but options exist with clean recent payment history
• No credit score: Alternative tradeline programs can help you qualify

VA Home Loan Credit Score Requirements Compared to Other Programs

VA loans are hands down the most flexible when it comes to credit score requirements. Let me break down how they compare to other loan programs:

Conventional Loans

• Require credit scores of 620 or higher
• Need 3-5% down payment minimum
• Private mortgage insurance required if less than 20% down

FHA Loans

• Allow credit scores as low as 580 with 3.5% down
• 500 credit score with 10% down
• Upfront and annual mortgage insurance premiums for life of loan

USDA Loans

• Most lenders want 640+, but some lenders will do 580+
• Rural areas only
• Income limits apply

VA Home Loans

• No minimum credit score from the VA
• No down payment required
• No mortgage insurance
• Competitive interest rates

Even if you don’t have perfect credit, you’re probably better off with a VA home loan than any other option.

Steps to Improve Your Credit Score Before Applying

If you know your credit score needs work, don’t wait. Start improving it now. Every point helps, and some changes can show results quickly.

Pay All Bills on Time

This is the biggest factor in your credit score. Set up automatic payments if you have to. Even one 30-day late payment can drop your score by 60-100 points.

Pay Down Credit Card Balances

Your credit utilization ratio – how much you owe compared to your credit limits – is the second biggest factor. Try to keep balances:

• Below 30% of limits (minimum)
• Below 10% if possible (ideal)
• Zero balances can actually hurt you

Don’t Close Old Credit Cards

Length of credit history matters. Keep those old accounts open even if you’re not using them.

Check for Errors

Get free reports from all three bureaus at AnnualCreditReport.com. Dispute any mistakes. I’ve seen credit scores jump 50 points just from removing errors.

Avoid New Credit Applications

Each application can temporarily lower your score, and new accounts reduce your average account age.

Handle Collections Strategically

Sometimes paying an old collection can actually hurt your score by updating the date. Work with a credit professional if you’re not sure what to do.

What to Do If Your Credit Score Is Too Low

If your score is below 580 and you’re getting turned down, don’t panic. You’ve got time to fix this.

Get Your Credit Report

Figure out what’s dragging your score down:

• Late payments?
• High balances?
• Collections?
• Old bankruptcies?

Each problem has a different solution.

Consider Professional Help

Work with a credit repair company or nonprofit credit counseling service. They can help develop a plan and dispute errors. Just make sure you’re working with a legitimate organization.

Focus on Quick Wins

• Paying down credit card balances can boost your score within 1-2 months
• Removing errors can happen even faster
• Pay-for-delete agreements with collectors (not all will do this)

Authorized User Strategy

Become an authorized user on someone else’s account. If you have a family member with excellent credit, their good payment history can help your score.

Be patient but persistent. Credit repair takes time, but every 20 points you add could save thousands over your loan’s life.

Understanding Residual Income Requirements

Here’s something most people don’t know about VA loans. The VA has residual income requirements that can sometimes matter more than your credit score.

Residual income is how much money you have left over each month after paying all your major expenses. It includes:

• Mortgage payment
• Other debts
• Taxes and insurance
• Utilities, food, clothing
• Other necessities

Regional Requirements

The VA sets different requirements based on family size and geographic region:

• Family of four in most areas: around $1,003
• High-cost areas (like California): $1,117+

This requirement can actually help veterans with lower credit scores. Strong residual income shows you can afford the payment even if your credit history isn’t perfect. I’ve had clients with 580 credit scores get approved because they had excellent residual income.

Getting Your Certificate of Eligibility

Before you can start shopping for a VA loan, you need your Certificate of Eligibility (COE). This proves to lenders that you qualify for VA loan benefits.

How to Apply

• Online through VA’s eBenefits portal (fastest)
• Through your lender (they can pull it for you)
• Paper application by mail

What You’ll Need

• Veterans: DD-214 discharge paperwork
• Active duty: Statement of service from personnel office
• National Guard: NGB-22, NGB-23 or retirement points statement
• Reserves: DD Form 256 or DD Form 257
• Surviving Spouse: Proof of Dependent Indemnity Compensation (DIC)

Your COE shows how much entitlement you have available. If you’ve never used your VA benefit, you’ll have full entitlement. If you’ve used it before but paid off the loan, your entitlement gets restored.

Don’t worry if you can’t find your service documents. The VA can help you get copies – it just takes a little longer.

Documentation You’ll Need for Your VA Loan Application

Getting approved requires more than just good credit. You’ll need to document your income, assets, and debts just like any other mortgage.

Income Documentation

• Pay stubs from last 30 days
• W-2s from past two years
• Self-employed: Two years tax returns plus profit/loss statements

Asset Documentation

• Bank statements from past two months
• Retirement account statements
• Investment account statements

Debt Documentation

• List of all current debts with account numbers, balances, monthly payments
• Credit cards, auto loans, student loans
• Any other monthly obligations

Additional Requirements

• Spouse’s documentation (if married, even if not on loan)
• Certificate of Eligibility

Most lenders have secure portals for electronic document upload. No more faxing or mailing paperwork.

How Long the VA Loan Process Takes

Most VA loans take 30 days from application to closing. That’s standard for any mortgage, but timeline varies based on several factors:

Factors That Can Add Time

• Lower credit scores or complex financial situations
• Manual underwriting requirements
• Additional documentation requests
• VA appraisal issues or delays

The VA Appraisal Process

VA appraisers have specific requirements beyond value. They check for:

• Safety and habitability standards
• Property condition requirements
• Environmental hazards

If issues are identified, they need addressing before closing.

Tips to Avoid Delays

• Start early
• Respond quickly to information requests
• Stay in touch with your lender
• Use experienced VA lenders

Choosing the Right VA Lender

Not all lenders understand VA loans. Some specialize in VA lending, others treat them like any other mortgage without understanding unique requirements.

What to Look For

• VA loan specialization
• Manual underwriting experience
• Monthly VA loan volume
• References from other veterans

Don’t Just Shop Rate

Consider the whole package:

• Fees and costs
• Customer service quality
• Credit challenge experience
• VA funding fee handling

Get Multiple Quotes

Shop at least three lenders. Rates and fees vary significantly. Pay attention to the VA funding fee (1.25-3.3% of loan amount) – lenders let you roll this into the loan.

VA disability compensation recipients are exempt from the funding fee entirely, saving thousands.

Common Credit Score Myths That Cost Veterans Money

I hear these misconceptions constantly. Let me clear up the biggest myths that keep veterans from using their benefits:

Myth: You Need 700+ Credit Score

Reality: Most lenders want 620, many go lower. Don’t let decent credit stop you.

Myth: VA Loans Are Harder to Get

Reality: VA loans have lower denial rates than most programs because of government guarantee.

Myth: You Need Perfect Credit for Good Rates

Reality: Rate difference might only be a quarter point. You’re still getting competitive rates with VA benefits.

Myth: Bankruptcies Disqualify You Permanently

Reality: Waiting periods exist but they’re shorter than other programs:

• Two years after Chapter 7 discharge
• One year into Chapter 13 payments
• Two years after foreclosure

Myth: Military Pay Doesn’t Count the Same

Reality: Military pay has advantages. BAH and allowances often don’t count as taxable income but do count for loan qualification, helping your debt-to-income ratio.

Once you submit your VA loan application:

Initial Review For Preapproval (1-3 Days)

• Credit report ordered
• Income and employment verified
• Automated underwriting decision

Underwriting (1-4 Days)

If needed, human underwriter reviews:

• Complete financial picture
• Compensating factors
• Additional documentation requests

VA Appraisal (7-10 Days)

• Property value determination
• VA standards verification
• Safety/habitability check

Clear to Close

Once appraisal and conditions are satisfied, you can schedule closing.

Stay responsive throughout – quick document turnaround speeds the process.

Building Credit for Future Real Estate Purchases

Even after getting your VA loan, keep improving credit. You might want to:

• Refinance for better rates
• Buy investment property
• Upgrade to larger home

Long-term Credit Strategy

• Keep balances low
• Pay all bills on time
• Avoid unnecessary credit applications
• Monitor credit reports annually
• Use credit monitoring services

Credit improvement is a marathon, not a sprint. Every improvement helps future financial opportunities.

The Bottom Line on VA Loan Requirements Credit Score

Your credit score matters, but it shouldn’t stop you from exploring your VA home loan options. Too many veterans think they need perfect credit when they really don’t.

Key points to remember:

• The VA sets no credit score requirements whatsoever
• Most lenders want 620, but many accept lower
• Manual underwriting opens doors for lower scores
• VA backing makes lenders more flexible than other loan programs
• Credit improvement is always worthwhile for better rates

I’ve helped veterans with all kinds of credit situations achieve homeownership. Some had scores in the 500s. Others had previous bankruptcies or foreclosures. Each situation is different, but there’s almost always a path forward.

Don’t let misinformation cost you the chance to use a benefit you earned through your service. If you’re ready to explore your options or have questions about your specific situation, the first step is getting an honest assessment of where you stand and what’s possible.

Remember: You earned this benefit through your service. A credit score is just a number, and there are ways to work around almost any credit situation if you’re willing to put in the effort.

About The Author - Jason Skinrood

I enjoy sharing my experience gained originating mortgage loans since 2003. When not helping borrowers with their mortgage needs, I enjoying spending time with family and friends and spending time outdoors. You can learn more about me here.