Yes, FHA (Federal Housing Administration) and VA (Department of Veterans Affairs) mortgages can be options for borrowers with less than perfect credit. Both programs have more flexible credit requirements compared to conventional mortgages, making them accessible to borrowers who may have lower credit scores or a less-than-ideal credit history.
Let’s take a closer look at both.
FHA Loans
The FHA insures mortgages issued by approved lenders, which reduces the risk for the lenders. As a result, FHA loans often have more lenient credit requirements. While the FHA does not have a specific minimum credit score requirement, most lenders typically look for a credit score of 580 or higher. However, borrowers with credit scores below 580 may still be eligible for an FHA loan with a higher down payment.
VA Loans
VA loans are specifically available to eligible veterans, active-duty service members, and their surviving spouses. The VA does not set a minimum credit score requirement for VA loans, but lenders may establish their own criteria. Many lenders look for a credit score of around 620 or higher, but they also consider other factors such as the borrower’s income and financial stability.
It’s important to note that while FHA and VA loans are more lenient in terms of credit requirements, lenders still evaluate other aspects of your financial profile, such as income, employment history, and debt-to-income ratio. Additionally, having a higher credit score generally improves your chances of securing more favorable loan terms, such as a lower interest rate.
If you have less than perfect credit, it’s advisable to work with loan specialists like Heritage Mortgage, experienced in FHA or VA loans. We can assess your specific situation and provide guidance on your eligibility and potential loan options. Additionally, taking steps to improve your credit over time, such as paying bills on time, reducing debt, and addressing any errors on your credit report, can help strengthen your overall financial profile and increase your chances of obtaining a mortgage loan.
We understand everyone’s situation is different. Here at HMBC, we are experts in the field with over a 20 year history of working with borrowers that cannot get approved by the “big banks”.
