Securing a VA Home Loan With Bad Credit: Improving Your Chances

It is unfortunate that the real world offers few rewards to those who have served their country. Securing a mortgage, for example, still depends on satisfying a series of conditions. Thankfully, things are made a little easier by a VA home loan, with bad credit borrowers benefiting especially.Despite the job security that working in the military offers, there can be problems due to the relatively low pay members earn. But the VA has provided an avenue towards mortgage approval despite a low credit rating. For current and former members of the military, there is little trouble in finding a lender that provides competitive terms, but there are certain factors that need careful attention. If they are heeded, then the chances of securing a VA home loan are much better.Requirements to QualifyNo loan is granted without the applicant meeting the required criteria. Those seeking a VA home loan with bad credit need to show they fully qualify for the loan, but qualification depends on more than simply income and affordability.These loans are designed for former members of the military. The branch of military can be practically any one of the armed forces, but National Guard and even reservists can also benefit through the VA. The promise of approval despite a low credit rating, however, is dependent on the fact no bankruptcy ruling was made against the applicant for at least two years previous.Also, a VA home loan can only be used to purchase a private residence, and not property to be rented out. This means the system cannot be taken advantage of by entrepreneurs.Debt AffordabilityAll borrowers are required to repay their loans, so even those seeking a VA home loan with bad credit must be able to prove they are gainfully employed. Pay slips or a bank account history are ideal documentation for the job.But the amount of income they earn, and the amount of debt they are already repaying, are also important. This is where the debt-to-income ratio becomes so important. It might seem to a borrower he can afford the repayments, but should something go wrong, he may struggle. The ratio sets a limit of 40% on the share of income to be used for loan debt repayments, so the borrower can cover any unexpected bills that come along.Of course, if existing debt repayments and general monthly expenses are lowered, the ratio improves. As a result, the chances of getting approval despite a low credit rating are greater.Role of the VAWhen getting a VA home loan with bad credit, it would be wrong to believe that the VA is the lender. The fact is that they are sponsors of the mortgage, and the lenders are reputable mortgage providers. The approval or rejection of an application has nothing to do with the VA itself.Since commercial mortgage providers make the approval decision, it is necessary to search for the best terms. Once an applicant is satisfied they have found a good deal, and apply, that is when the VA confirms their status and guarantee 25% of the sum borrowed. It is this degree of security that makes approval despite a low credit rating possible.With interest rates lowered and no need for a down payment, the expense surrounding the mortgage plummets. So, through a VA home loan, even bad credit ratings cannot stop the chances of securing a home.