VA Credit Score Guidelines on Purchase and Refinance

Suppose you’re a veteran, active-duty service member, or surviving spouse. In that case, you may wonder if your credit score qualifies for a VA loan. The great news? VA credit score guidelines on purchase and refinance are more flexible than most other loan types—making homeownership and refinancing more accessible to our military community. In this 2025 guide, we’ll explain the VA credit score guidelines for purchase and refinance, including minimum credit score requirements, lender overlays, and how to improve your chances of getting approved.

What Is a VA Loan?

A VA loan is a type of mortgage that is backed by the U.S. Department of Veterans Affairs. It’s designed to help eligible veterans, service members, and surviving spouses buy, build, or refinance a home with favorable terms—often with no down payment or monthly mortgage insurance. There is no minimum credit score set by the VA. Still, VA loan lenders may impose their own requirements—lender overlays.

VA Credit Score Guidelines on Purchase

Here’s what you need to know about VA credit score guidelines on purchase loans in 2025. VA doesn’t set a minimum credit score requirement, but most lenders demand a minimum credit score of 580–620. Some VA-approved lenders like Gustan Cho Associates have no lender overlays, meaning they approve VA loans with credit scores below 580. Credit score impacts your interest rate and how easy it is to get automated approval. A lower credit score doesn’t automatically disqualify you from a VA loan but the lender you choose matters.

VA Purchase Loan Highlights:

• 0% down payment required in most cases
• No PMI (Private Mortgage Insurance)
• Competitive interest rates even with lower credit scores
• No loan limit as long as you qualify based on income and credit
• Can be used to purchase single-family homes, condos, and new construction

VA Credit Score Guidelines on Refinance

When it comes to VA credit score guidelines on refinance, there are two main options:

1. VA IRRRL (Interest Rate Reduction Refinance Loan)
   Also known as the VA Streamline Refinance, the IRRRL helps you refinance your current VA loan to a lower rate without income documentation or appraisal. It has no minimum credit score required by the VA, but some lenders may require a credit score of 600–640. No income verification in most cases. No appraisal required and must show that the new loan offers a net tangible benefit (like a lower rate).
2. VA Cash-Out Refinance
   This option permits you to refinance your current VA or non-VA loan and take cash out using your home’s equity. Minimum credit score varies by lender (typically 600–620). VA does not set a credit score floor, but lenders do. It requires a new appraisal and full underwriting and you may refinance the full value of your home.. The VA credit score guidelines on refinance are flexible, especially if you’re working with a lender that doesn’t impose overlays.

Overlays on VA Loans From Mortgage Lenders

Not all mortgage companies have the same lending guidelines on VA loans. Just because one lender says no does not mean a different one will deny you too. Over 80% of our clients at Gustan Cho Associates are borrowers who could not qualify at other lenders due to lender overlays or because the lender did not have the mortgage loan option the borrower was looking for. Mortgage lenders have an unethical habit of just disclosing their lender overlays and not the minimum agency guidelines of the Veterans Administration. For example, one lender may tell a borrower that the minimum VA credit score requirement is 640 while another says it is 620.

VA Agency Guidelines versus Overlays by Mortgage Lenders

They get the conflicting debt-to-income ratio requirement as well on VA loans. Some lenders may say the Department of Veterans Affairs (VA) has a maximum debt-to-income ratio requirement of 45%. Or other lenders may say the VA DTI requirement is 50% DTI. VA Credit Score Guidelines do not have a minimum credit score requirement or a maximum debt-to-income ratio requirement on VA loans.

Factors That Affect VA Loan Approval With Bad Credit

Lender Overlays Versus Agency Guidelines on VA Loans

The reason why lenders have different VA Lending Requirements is that they have their own lender overlays on VA loans. Lender overlays are mortgage guidelines that are above and beyond the minimum mortgage guidelines required by the Department of Veterans Affairs (VA). For example, borrowers do not have to pay outstanding collections and/or charged-off accounts to qualify for VA loans per VA Agency Mortgage Guidelines.

VA Guidelines on Outstanding Collections and Charged-Off Accounts

Lenders may require borrowers to pay outstanding collections and charge off accounts even though VA Agency Guidelines do not require them to pay them off. This additional requirement of mandating borrowers to pay outstanding collections and charge off accounts by the individual lender is called a lender overlay by the particular lender.

VA Agency Guidelines

A lender can have any type of overlay. Gustan Cho Associates is one of the very few mortgage companies licensed in multiple states with no lender overlays on government and conventional loans. We are also experts in manual underwriting of VA loans. We can go up to 65% on approve/eligible per AUS files and up to 55% on manual underwriting on VA loans.

Basic VA Credit Score Guidelines for VA Agency Mortgage

The general VA credit score guidelines for VA agency mortgage are lenient. The Veterans Administration sets agency mortgage guidelines that are more lenient than HUD, Fannie Mae, and Freddie Mac so its veterans can qualify for VA loans with ease. There are no minimum credit score is required with an automated underwriting system (AUS) approval.  

Debt-To-Income Ratio Guidelines on VA Loans

VA loans has no maximum debt-to-income ratio requirement with an AUS Approval.  The team at Gustan Cho Associates has helped thousands of veterans with credit scores down to 500 FICO on a VA manual underwriting with 65% debt to income ratio get to the closing table.

VA Loans After Bankruptcy 

Outstanding collections and/or charged-off accounts do not have to be satisfied unless the AUS conditions the collections or other derogatory credit tradelines be satisfied.  There is a 2-year waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale.

Borrowers in a Chapter 13 Bankruptcy repayment plan can qualify during the repayment plan after 12 months into the plan with Trustee Approval and manual underwriting.

There is no waiting period after the Chapter 13 Bankruptcy discharge date to qualify for VA loans. Any bankruptcy discharge that has been seasoned less than 2 years needs to be manually underwritten to qualify for VA loans. Late payments in the past 12 months are allowed if the borrower gets automated approval from AUS.

In Conclusion To VA Credit Score Guidelines

The Department of Veterans Affairs (VA) has very lenient credit and debt-to-income ratio guidelines. More so than any other loan program. There are no credit score requirements or debt-to-income ratio requirements on VA loans as long as borrowers can get automated approval by the automated underwriting system. The team at Gustan Cho Associates has helped thousands of veterans with credit scores down to 500 FICO qualify and get approved for VA loans. We have helped thousands of veterans with debt to income ratio up to 65% debt to income ratio get approved and closed on VA loans.

Frequently Asked Questions (FAQs): VA Credit Score Guidelines on Purchase and Refinance

1. What’s the minimum credit score for a VA loan?

The VA does not set a minimum credit score, but most lenders demand at least a 580 to 620 credit score for VA loan approval. Some lenders, like Gustan Cho Associates, approve VA loans with credit scores below 580 using manual underwriting. This is based on the VA credit score guidelines for purchase and refinance.

2. Can I get a VA loan with bad credit?

Yes. Many borrowers qualify for a VA loan with bad credit, especially if they have strong income, a low debt-to-income ratio, and a clean 12-month payment history. Lenders who follow VA guidelines without overlays may approve credit scores as low as 500.

3. Do VA loans have different credit score guidelines for purchase and refinance?

Based on VA credit score guidelines, VA purchase loans often require a 580+ score from most lenders, while VA streamline refinances (IRRRL) usually don’t have a credit score requirement at all. Cash-out refinances typically require a credit score of 600 to 620, depending on the lender.

4. What credit score is needed for a VA cash-out refinance?

Most of the lenders require a minimum credit score of 600 to 620 for a VA cash-out refinance. The VA itself does not set a limit for credit score, but individual lenders may add stricter rules.

5. Does a lower credit score affect my VA loan interest rate?

Yes. While VA loans offer competitive rates, a lower credit score may lead to a slightly higher interest rate, depending on the lender’s pricing. However, VA loans still tend to offer better rates than other loan programs even with less-than-perfect credit.

6. Can I refinance a VA loan with a low credit score?

In line with the VA credit score guidelines, yes you can. If you’re doing a VA IRRRL (streamline refinance), almost all lenders do not require a credit score check. For VA cash-out refinances, you’ll need to meet the lender’s minimum score usually 600 or higher.

7. Will collections or late payments hurt my VA loan approval?

They can, but they won’t automatically disqualify you. Lenders want to see that you’ve re-established credit. If you have no late payments in the last 12 months, your chances of approval improve under VA credit score guidelines on purchase and refinance.

8. What is manual underwriting, and how does it help VA borrowers with low credit scores?

Manual underwriting allows a lender to approve a VA loan based on the borrower’s overall financial picture, not just the credit score. It’s helpful for borrowers with scores under 580 or those with recent credit issues.

9. Do VA loans require mortgage insurance with low credit scores?

As per the VA credit score guidelines, no. One of the biggest benefit of VA loan is that it don’t require monthly mortgage insurance, even if you have a low credit score or put no money down.

10. How can I increase my credit score to qualify for a VA loan?

To improve your score:

• Pay bills on time
• Lower credit card balances
• Avoid new credit inquiries
• Dispute incorrect items on your credit report

This can help you meet VA credit score guidelines on purchase and refinance more easily.

Get Approved For VA Loans With Bad Credit With Credit Scores Down to 500 FICO

To get qualified or pre-approved or for more information about VA credit score guidelines or other mortgage/real estate-related topics, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates has no lender overlays on government and conventional loans. We have over a dozen non-QM wholesale lending relationships with alternative mortgage and non-QM wholesale lenders. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.