How to Get Approved for a VA Home Loan With Bad Credit

By Brock Cooper

Members of the military (past and present), reservists and their spouses are eligible for a special loan backed by the Office of Veterans Affairs. While this is welcome news to veterans, occasionally bad credit can make it difficult to qualify for a loan. You can overcome this obstacle if you understand your credit and go to the bank armed with as much information as possible. The dream of owning a home could be within your grasp.

Examine your credit report from each of the three main credit bureaus -- Experian, Equifax and TransUnion. Find out your credit score and assess the areas that are negatively impacting your credit. Contact the agencies if there are any mistakes on the report and have them corrected. This will raise your score.

Save up for sizable down payment. A standard VA loan requires a 10 percent down payment for a home, but applicants with bad credit may need to pay 20 percent or more. The larger your down payment, the more likely you are to get the loan.

Visit the bank personally and talk with a loan representative. Discuss your credit, how you are improving it, and that you are willing to accept higher interest rates. Make sure you know how much you can afford and don't accept a monthly payment that is too high.

Ask a friend or relative to be a co-signer on the loan. This connects their good credit to the VA loan and increases your chances of qualifying for it. Pay the payments on time to make sure their credit isn't negatively affected and to improve your credit. In a few years, refinance for a better interest rate if possible.

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