VA loans With Bad Credit

One of the biggest gestures by the US government towards its veterans was when President Roosevelt signed in to law the Servicemen's Readjustment Act in 1944. The bill allocated funds for education, books, unemployment benefits for a year and also for housing. Veterans can think about home buying without any down payment, but if they are looking for VA loans with bad credit, there are some obstacles that need to be overcome before securing the loan. There are over 25 million veterans who are eligible for loans under the Servicemen's Readjustment Act, popularly known as the GI Bill. VA guarantees a maximum of 25 percent of a home loan amount and all veterans have to qualify for the program, eligibility is not automatic, but some do get bad credit loans.

Eligibility for VA Loans

For thousands of personnel who served their country buying a home has become a reality after the GI Bill of Rights came into existence. Over the years many war veterans have benefited from this program and it is one of the biggest assistance programs by the government towards home loans for veterans. The Department of Veterans Affairs proudly announces the VA loans as 'loan guarantee home loan program'. These type of loans are given by banks, mortgage companies and other finance institutions, with a guarantee from the government that the lender will be protected upon non-payment of loan. Some of the eligibility criteria are:

• People who served during war time, like World War II, Korean War, Vietnam War and Gulf War.
• Individuals who have completed at least 181 days of active duty or 90 days of active duty during the gulf war.
• For those who were discharged from duty because of duty related disability, medical condition, or reduction in force can also apply.
• If you are a spouse of a veteran who died while on duty and are not remarried.
• Spouse of a person who is missing in action (MIA) or is a recognized prisoner of war (POW).
• People who have completed 6 years in National Guard or Selected Reserves.
• Only people with an Honorable discharge can apply.
• United States citizens who served with a government allied to the US during World War II can also apply.

Bad Credit VA Loans

Lenders will look into your past credit history before sanctioning the loan although it is not as stringent as it would be for other applicants. Under some specific circumstances you can still get VA loans with bad credit, for example:

• If you have clean financial transactions for the past 12 months and have been sticking to your repayment plan, you might get an approval. The lender will also consider a specific period, if you have had, in your financial transaction which was bad, but your recent history is clear.
• There are special exceptions for disabled veterans who want to apply for a VA loan in spite of a bad credit.
• A minimum of 2 years after the discharge date from a Chapter 7 Bankruptcy and documents to prove current financial situation.
• For a person on Chapter 13 Bankruptcy whose payments to the court are clear for a period of 1 year and proof of recent financial transactions.
• The applicants also needs to establish that they are now financially secure and have a steady job.

One of the things you could do if you are applying for VA loans is to improve your current credit score by obliging your current financial commitments.