The Credit Requirements for VA Home Loan Approval

VA home loan approval is easier to achieve on many levels than a standard private home loan. For example, there is no down payment requirement, and the lack of a credit history should not hold an applicant back. That said, though, there are some issues that can be red flags even for a VA home loan lender. The VA will be hesitant to guaranty the loan if you have a history of unpaid debts, bankruptcies within the past few years or outstanding debts to the federal government.

Unpaid Debt History

For a private mortgage loan, most lenders look to see all debt payments have been made for a period of at least 24 months. This particularly applies to installment loans since mortgages are installment loans. With a VA home loan, a lender will still look for a record of repaying debts, specifically installment debts, in a timely manner. However, the lender will generally only require all payments be made on time for at least 12 months, leading up to the application. This plus the VA's guaranty on the loan, which says the VA will purchase the loan if you default, should be enough to satisfy concerns over past payments of debts.


If you have filed for Chapter 7 bankruptcy, the VA would like for the bankruptcy to be older than two years. You will have to provide a complete explanation of the bankruptcy and prove you have rebuilt your credit history since the bankruptcy. In this case, your job stability will also be under the microscope. This is still better than a private lender's requirements; a private lender may outright deny you if you have a bankruptcy in your history at all. If your home was foreclosed on in a previous bankruptcy or other default within the past two years, you will not be eligible.

Chapter 13 bankruptcy, will not affect your application to the same degree. As long as you have made the court ordered payments on the bankruptcy, it is older than one year, and the trustee assigned to your bankruptcy authorizes the new loan, you will be eligible for a loan under the VA program.

Debts to the Government

In general, it is best to pay your federal debts before seeking a VA loan. However, there is some flexibility here for certain types of debts. If there is an outstanding collection that is relatively minor, it may not need to be repaid prior to the loan's approval. In the case of a judgment, though, all payments must be made for the new loan to be approved. It is acceptable to have outstanding loan payments, such as a farm loan or student loan, to the federal government. However, if any debts are in delinquency, they must be brought current before the loan is issued. For example, if your student loans are delinquent due to missed payments, you must rehabilitate the loan to good standing before applying for a VA home loan guarantee.