What Is The Minimum FICO Score For A Veterans Affairs Loan?

The VA does not set a minimum FICO score for VA loan eligibility; VA guidelines only require that the borrower meets the credit criteria of the chosen lender. In practice, the Department of Veterans Affairs leaves the score decision to the lender's underwriting policies.

Most lenders apply an 'overlay' and will not approve a VA loan with a FICO score below about 620, though some require 640 or higher. These lender‑specific thresholds are covered in the next section, which explains typical score requirements and how to work around them. VA home loan eligibility requirements

Most lenders set their own floor, and the industry standard is a FICO score of 620 for a VA loan, though some accept 580 and many prefer 640 to secure the best rates.

• 620  - common baseline used by banks, credit unions, and VA‑approved lenders.
• 580  - allowed by a few lenders with a lenient overlay, usually paired with higher interest or stricter documentation.
• 640  - preferred by lenders who want borrowers to qualify for the lowest rates and most favorable terms.
• Below 620  - approval possible only with strong compensating factors such as a sizable down payment, a creditworthy co‑borrower, or ample cash reserves (see 'How lenders treat scores under 620').

Lenders usually treat any FICO score under 620 as a red flag and may add stricter requirements or refuse a VA loan.

• Most banks set 620 as the lowest score they'll accept for a VA loan; below that they often demand a larger down payment or higher income.
• Some lenders apply an overlay that raises the minimum credit score to 640 or 660, even though VA guidelines impose no floor.
• Borrowers with scores between 580 and 619 typically need a co‑borrower or a compensating factor such as a low debt‑to‑income ratio.
• Scores under 580 frequently lead lenders to decline the application unless the borrower qualifies for an IRRRL or can prove strong alternative credit.
• Every 20‑point drop below 620 can add roughly 0.25‑0.5% to the interest rate, increasing the monthly payment.

A higher FICO score pulls the interest rate toward the VA's baseline. For example, a borrower with a 740 FICO often sees a lender quote the current VA‑eligible 30‑year fixed at 3.25 %, matching the market's low‑rate tier. The strong score signals low risk, so the lender applies no overlay and lets the borrower lock the most competitive rate available.

A lower FICO score pushes the rate up through lender overlays. A veteran with a 610 FICO may receive the same 30‑year loan at 4.30 %, reflecting a typical 0.75‑percentage‑point surcharge that lenders attach to mitigate perceived risk. Some lenders even shift the borrower to a higher‑indexed product, such as an ARM, to further protect their margin. This rate jump illustrates why, despite VA guidelines imposing no minimum score, the lender's overlay directly translates credit quality into borrowing cost. How credit scores affect mortgage rates

Boost your FICO score in five quick steps before applying for a VA loan, giving you a better chance to meet lender overlays even though VA guidelines set no minimum.

1. Pull all three credit reports.
   Get free copies from AnnualCreditReport.com, compare them, and flag any inaccurate items. Dispute errors directly with Experian, Equifax, or TransUnion; corrected entries can lift a score by 20‑40 points within weeks.
2. Pay down revolving balances to below 30 % utilization.
   If your credit‑card total is $4,000, aim to keep the balance under $1,200. Lower utilization shows lenders that you manage debt responsibly and often bumps the FICO score faster than a new account.
3. Stop opening new credit for 3‑6 months.
   Each hard inquiry costs 5‑10 points and adds to the average age of accounts. Holding off on new cards or loans lets the score settle and improves the age‑of‑credit factor, which matters to lenders that overlay the VA's flexible rules.
4. Become an authorized user on a well‑managed account.
   If a family member has a credit card with a long history and low balance, ask to be added. The account's positive payment history appears on your report without requiring you to carry debt.
5. Add a small, secured credit line if you have a thin file.
   Deposit $500‑$1,000 with a bank that issues a secured card, use it for a few purchases each month, and pay in full. This builds payment history and can raise a low‑score borrower into the 620‑range that many lenders use as a baseline.

These actions target the most impactful FICO components - payment history, utilization, and credit age - so you enter the VA loan process with a stronger profile before facing any lender‑specific overlays.

Alternative credit files let you demonstrate repayment habits when your traditional FICO score looks thin. Lenders use them to verify that you consistently pay rent, utilities, cell phone bills or insurance, satisfying VA guidelines that require proof of reliability even though VA sets no minimum FICO score.

For example, a veteran with a 580 FICO score can submit three years of on‑time rent payments reported through a service like Experian Boost. The lender sees a clean payment history, treats the borrower as creditworthy, and may approve a VA loan despite a lender overlay of 620.

Another case involved a borrower who provided 24 months of utility and telecom bills; the lender factored this data and granted a loan at the same rate as someone with a higher traditional score. Both scenarios show how alternative data can bridge the gap between thin credit files and lender expectations, positioning you for approval before you move to the next section on co‑borrower options. VA loan alternative credit guidance

A creditworthy co‑borrower can satisfy lender overlays while your VA loan benefits stay intact. The VA guidelines never require a co‑borrower and never reduce your entitlement; the lender's decision is what changes.

• Pick a co‑borrower whose FICO score meets or exceeds the lender's overlay (often 620 or higher).
• Have the co‑borrower sign the loan application as a joint borrower, not merely a guarantor; this shares liability and lets the lender count their income.
• Verify the lender's policy: some apply the lower of the two scores, others use the primary borrower's score only.
• Keep your own credit profile clean; the co‑borrower cannot hide issues in your report.
• Remember that the VA entitlement calculation uses only the veteran's service record, so adding a non‑veteran spouse does not affect your benefit amount.

For example, a veteran with a 580 FICO score partnered with a spouse scoring 750; the lender applied its 620 overlay to the spouse's score, approved the loan, and the veteran retained full VA entitlement as explained in the VA loan eligibility overview.

IRRRL loans let borrowers sidestep the usual lender overlays that demand a 620 FICO score or higher. Because VA guidelines impose no minimum credit score, a lender can approve an IRRRL even when the applicant's FICO score falls below typical thresholds, provided other eligibility criteria are met.

Many lenders treat IRRRL applications more flexibly than standard purchase loans. They often waive the 620 FICO score rule if the veteran has sufficient equity, a clean payment history, and the refinance aims to lower the interest rate. For example, a veteran with a 580 FICO score can secure an IRRRL when the loan‑to‑value ratio is under 90 % and the current loan is current, even though the same score might block a conventional VA refinance.

This exception sets the stage for the next section on how bankruptcy or foreclosure influences VA loan timing.

Bankruptcy or foreclosure doesn't automatically bar you from a VA loan, but it does set waiting periods that affect when you can apply.

The VA's own guidelines allow a loan after:

• Chapter 7 bankruptcy - 2 years from discharge
• Chapter 13 bankruptcy - 4 years from discharge (or 2 years after the repayment plan ends)
• Foreclosure - 2 years from the date of the sale

Lenders often add overlays, so many require 3‑5 years of clean credit before they will underwrite a VA loan, especially if your FICO score sits below 620.

Because the VA imposes no minimum FICO score, a low score after a bankruptcy can be offset by strong compensating factors, but a lender's longer waiting period will delay your application until the required time has passed. VA loan eligibility after bankruptcy or foreclosure explains the official timelines and how lender overlays vary.

Five quick checks can reveal why your VantageScore appears lower than your FICO score:

• Confirm Credit Karma is pulling from TransUnion; any account missing on that bureau will drag the VantageScore down (the FICO score may still use Equifax or Experian data).
• Compare update cycles; VantageScore often lags up to 30 days after a creditor reports, so recent positive activity may not yet appear.
• Examine credit utilization; VantageScore can penalize high balances more sharply, especially if a single card exceeds 30 % of its limit (how credit utilization hurts scores).
• Scan for new hard inquiries or recent late payments; VantageScore may weight these events higher in the short term than the FICO score.
• Look for duplicate or erroneous entries that only show on TransUnion; a single stray collection can lower the VantageScore while leaving the FICO score untouched.

Ask lenders these key questions to uncover how their FICO rules affect your VA loan eligibility.

• Does your institution apply a lender overlay, and if so, what is the minimum FICO score required for a VA loan?
• How do you treat FICO scores between 580 and 620 - are they eligible for a standard purchase or only for an IRRRL?
• Will a higher FICO score lower my interest rate, and what rate tiers do you use for VA loans?
• Do you consider alternative credit files when a borrower's FICO score falls below your stated threshold?
• How does a recent bankruptcy or foreclosure change your FICO requirement for a VA loan?