A common question by Orange County veterans interested in using VA financing to purchase or refinance a home is “what is the minimum FICO required?” The answer to this question can vary from lender to lender. Many lenders require a minimum of 620. But there are lenders who will allow FICO scores as low as 580 or lower.
VA lenders may adjust the minimum FICO score depending on the loan amount and purpose of the loan. For example, many lenders will allow a minimum FICO of 620 only when it is a purchase loan and the loan amount is $453,100 or less. A loan amount greater than $453,100, which is considered a “high balance” is common in Orange County, may require a minimum FICO of 640. A refinance may have a different set of requirements. A refinance of a Conventional loan to a VA loan where the loan amount is less than $453,100 may require a FICO score of at least 640, while VA loans greater than $453,100 require a minimum FICO of 660. The VA loan limit for 100% financing in Orange County in 2018 is $679,650. Loan amounts above $679,650 are possible but would require some equity or down payment. A VA loan above the county limits for 100% financing is considered a “Jumbo VA Loan.”
Other VA Loan Credit Requirements
Overall, VA is one of the most flexible loan programs when it comes to credit. A Veteran can get a $0 down VA loan in Orange County only two years after a bankruptcy or foreclosure. Most loan programs require at least 4 fours seasoning after a foreclosure, if not closer to 7 years. And more down payment. But with VA, the 2 year requirement makes it a very flexible program. There is no seasoning requirement for a short sale.
How is the FICO Score Determined
FICO, which is the acronym for Fair Isaac Company, is a program which is used by the credit bureaus to determine a borrowers creditworthiness. There are different versions of FICO depending on what a person is financing. The FICO score shown on a credit report at a car dealership will be different than the FICO score pulled by a lender. There are different factors that a home lender deems to be important versus what a car lender will think is important. Also, there are other types of scores that are readily available to consumers, including the Vantage Score. However, the only way to get your actual FICO score that a mortgage lender will see if to go to a mortgage lender.
Get PreApproved for a VA Loan
One of the biggest reasons why it is so important to get PreApproved for a VA loan prior to searching for a home is because of the credit report. Even the best borrowers can sometimes have a surprise on their credit report. Finding this out and clearing any credit report errors prior to finding the home of your dreams is important if the closing is to be a smooth transaction. This is why the first step for a Veteran in Orange County who is thinking of using VA financing to buy a home should always be to call a local Orange County VA lender.
Authored by Tim Storm, a California Mortgage Loan Officer MLO 223456 – Please contact my office at the Home Point Financial (NMLS 7706). Direct line at 949-640-3102. www.OrangeCountyVALoans.com