You may be qualified for a VA loan if you are an active-duty military member, veteran, or surviving spouse. However, military life is difficult, and this is frequently reflected in your money. It's fairly unusual for service people to have credit problems. As a result, you may be wondering how to acquire a VA loan with terrible credit.
Any loan is more difficult to acquire with bad credit, but it is feasible to qualify for a VA home loan with less-than-perfect credit. However, keep in mind that if you are approved with bad credit, your loan conditions will be less favorable. So, before you apply for the best VA loans for bad credit in Chicago, IL, you should know the things mentioned below.
Can I Apply for A VA Loan After Filing for Bankruptcy or Foreclosure?
Bankruptcies and foreclosures do not exclude qualified parties from obtaining VA loans. There are, however, mandated waiting periods. These are known as seasoning periods. They do not commence until the bankruptcy has been dismissed or the foreclosure has been completed.
Before you may qualify for a VA loan in Chapter 13 or credit counseling program, you must have 12 months of on-time payments. Non-FHA loan foreclosures and Chapter 7 bankruptcies must be at least two years old before applying. Longer wait periods may be required if an FHA loan default occurs. Even when your seasoning time has over, you may need to wait a little longer. The damage to your credit can be severe, and it can take years to repair your credit.
What Is An Acceptable Credit Score for A House Loan?
If you're wondering what a decent credit score is for a house loan that isn't a VA loan, it's still 620. However, the interest rates on a conventional loan will not be as low as those on a VA loan. Your interest rate will be greater if your credit score is less than 700.
When applying for a VA loan, poor credit is typically not an issue. Even if you have a poor credit history, the VA may be ready to work with you. If, on the other hand, you have defaulted on a VA loan, the situation may be a little more complicated. After more than four years, you may be eligible to qualify for a second VA loan in some instances. However, the VA may be ready to guarantee only a part of the loan rather than the full amount. In other circumstances, if everything else looks to be in line, they may be ready to guarantee the full loan.
