Why VA Home Loans With Bad Credit Are A Viable Financing Solution

Retirement brings huge changes for everyone, but for military veterans the changes can be even greater. Just finding alternative employment and dealing with falling income can create bad credit scores quickly, so buying a new home is a challenge. Thankfully, getting a VA home loan with bad credit is not so difficult.The availability of VA home loans means there are several financial breaks to benefit from, making buying a home more affordable. From lower interest rates to a reduced risk due to government guarantees, veterans are able to purchase the property they want.It makes sense that home loans guaranteed by the VA should give military veterans a boost to their efforts to buy a home, but it is still necessary to meet set criteria first. Understanding what criteria and terms are influential is important.The Reason For VA LoansAfter World War II, the US government recognized that veterans returning from the war needed some assistance in settling into civilian life again. One big problem was in buying a home, but there was also a selection of personal loans available too. Many GIs sought the more affordable VA home loans, with bad credit a major hurdle for many of them.Today, though issued by private and commercial lenders, the loans are partially guaranteed by the Department of Veteran Affairs (VA). Just 25% of the figure is guaranteed, but this is enough to encourage lower interest rates and remove the need for a down payment. Overall, VA home loans are very affordable.If, for example, there is a $200,000 home loan guaranteed by the VA, just $150,000 is considered unsecured. And if a 10% down payment is made (though it is not necessary), that reduces the amount at risk to $135,000. So, the lender adjusts the interest to match a mortgage of $135,000, not $200,000.Necessary VA CriteriaQualifying to get a VA home loan with bad credit is pretty simple since a military history is easy to supply. All that is needed is confirmation from the military that the applicant did serve in the military. Once that is done, the 25% guarantee, and the benefits that come with it, can be looked forward to.But there are other conditions that must be satisfied too before a VA home loan can be approved. For a start, the applicant must not have a record of defaulting on any existing or previous loans within the last 12 months before submitting the application.There can have been no bankruptcy ruling filed in the name of the application for at least 2 years before the application, though previous bankruptcies may be taken on board - these, however, are not deciding factors in the decision making process. Also, a home loan guaranteed by the VA will only be granted to someone in full-time, gainful employment, proving the loan repayments can be made.Securing a VA Home LoanUnfortunately, not every lender offers VA home loans with bad credit. These loan products are typically available from specialist lenders, but it is possible to find them online too. Searching the Internet is the most effective way of finding VA home loans, with comparison sites providing fast access to the best options out there.But choosing a home loan guaranteed by the VA still requires some effort, with the small print of such deals revealing hidden charges and fees that push up the cost of the loan itself.Of course, checking out the reputation of any online lender is important too. By consult the Better Business Bureau it is possible to work out if a prospective lender is trustworthy or not.