Meet a Lender’s Credit Score and Income Requirements

Meet a Lender’s Credit Score and Income Requirements

LoanDepot

LoanDepot is among the largest non-bank lenders in the country and offers various loan products, including VA loans. The lender is an ideal choice if you’re short on time and you need to close a VA loan fast. LoanDepot’s Mello Smartloan digital application eliminates paperwork to reduce the closing time by 17 days.

A minimum credit score of 620 is required for a loan, but loanDepot doesn’t publish the APR, so you have to apply to find out what you qualify for. However, they will waive the refinancing fee for any existing customers.

NewDay USA

Founded HE515CT GR in 1998, NewDay USA is a veteran-focused lender specializing in VA home loans. To date, the lender has helped more than 75,000 veteran families buy homes. NewDay offers fixed-rate mortgages with 15-year or 30-year terms as well as mortgage refinancing while providing additional benefits.

You can save up to $3,000 in mortgage payments per year through the VA Streamline Refinance. The company offers a cash-out refinance equivalent to 100% of your home’s value. NewDay USA does not openly advertise its mortgage rates, so you would have to apply to find out. It’s also unclear if NewDay charges an origination fee as they don’t reveal their lender fees upfront.

What are VA loans?

VA loans are mortgage products backed by the Department of Veterans Affairs. These loans allow service members, veterans, and their surviving spouses to buy homes with little or no money down and avoid private mortgage insurance. In addition, VA loans feature some of the most competitive interest rates on the market.

Although conventional mortgage lenders issue VA loans, they’re guaranteed by the federal government. Unlike standard loans, VA loans provide 100% financing when buying a home. Eligible borrowers can use the VA loan to purchase or build a house, renovate a house, or refinance their mortgage.

The VA doesn’t offer mortgage financing directly, but it sets the qualifying standards and dictates mortgage terms. Qualified borrowers can then secure a mortgage from private lenders such as mortgage companies, credit unions, and banks.

There are several types of VA loans, and they’re all classified as non-conforming loans due to their flexible credit requirements, lower interest rates, and down payment waivers. However, VA loans carry no prepayment penalties, and the VA may provide some assistance if you’re unable to keep up with your monthly payments in certain situations.

Who qualifies for a VA loan?

Veterans with an honorable discharge and service members on active duty who meet the minimum requirements can qualify for a VA loan. Surviving spouses of veterans who died in active service are also eligible for VA loans.

  • Meet the VA’s basic service requirements
  • Obtain a valid Certificate of Eligibility
  • Meet a lender’s underwriting requirements

Department of Affairs’ Basic Service Requirements

  • More than 90 days of continuous active duty during wartime
  • More than six months of active service during peacetime
  • Six years of service in the National Guard or Reserves
  • You’re a surviving spouse of a veteran who died in the line of duty or from a service-related disability

Have a Valid Certificate of Eligibility

You need the above qualifications to secure a Certificate of Eligibility (COE). The certificate proves that you’re eligible for VA financing and provides details about your VA entitlement.

First-time borrowers have full entitlement, allowing them to take out a VA loan without a down payment. It also guarantees the lender that the VA will pay 25% of any loan amount over $144,000 if you default.

When issuing VA loans, most VA lenders set a minimum credit score requirement of 620 to 640. They will also look at your income level and debt-to-income ratio to gauge your ability to repay the loan. Your income level priount of money you can borrow.

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