VA Loan Credit Score Requirements 2025: The Truth About 620, 580, 500 and Beyond
VA Loans and Credit Scores: No Overlays. Real Approvals. The Facts Behind 620, 580, and Even 480.
The Department of Veterans Affairs does not set a minimum credit score. Any “minimum score” you’ve heard—620, 600, 580—is a lender overlay, not a VA rule. We evaluate whole files, not just a number, and we use manual underwriting when appropriate. We have closed VA purchase loans for borrowers in the 480s when the overall profile supported approval. Results vary. Not everyone with a low score will qualify, because credit profiles reflect circumstances and recent behavior.
What this page covers
- What the VA actually requires vs. what lender overlays add
- Why “620” or “580” are internal cutoffs, not VA rules
- How low scores can still be approved with compensating factors
- Manual underwriting and how it changes the approval path
- Real examples: debt negotiation plan; medical hardship
- High-value Q&A veterans are searching today
- How to strengthen a file in 30/60/90 days
- Correct interpretation of the “last 12 months” standard
- Why the JD.Mortgage team at PRMG is different (no overlays)
Does the VA have a minimum credit score?
No. The VA Lenders Handbook focuses on whether the borrower represents a satisfactory credit risk, not a specific score. Underwriters are instructed to evaluate overall patterns, obligations, income stability, and residual income.
Reference: VA Lenders Handbook, Chapter 4: Credit Underwriting
What are lender overlays and why do they block approvals?
Overlays are extra rules that lenders add on top of VA guidance. Common examples include a rigid “620 minimum” or “580 minimum,” hard DTI caps regardless of residual income, blanket bans on manual underwriting, and automatic rejections of certain derogatories even when seasoned or explained.
We do not impose overlays. We evaluate the full file against VA guidance and consider manual underwriting when the profile supports approval.
Setting expectations: circumstances drive scores, and not every low score will qualify
Credit scores reflect context. A low score might follow a managed debt plan, medical hardship, deployment, divorce, income disruption, or a short window of missed payments followed by recovery. Underwriters prioritize recent behavior, residual income, and documented explanations far more than a single number.
Some files are approvable now. Others benefit from a focused 30/60/90-day improvement plan before submission. The plan often determines whether a file clears manual underwriting.
Real circumstances that closed — despite very low scores
Case 1: Debt Negotiation Plan (scores in the 480s)
A borrower enrolled in a debt negotiation plan. Participation cratered the score, but the borrower consistently met required payments and stabilized cash flow. We documented compliance, verified stable earnings, and demonstrated strong residual income. With manual underwriting, the VA purchase loan was approved.
Case 2: Medical Hardship After Childbirth
A couple faced significant medical costs after their newborn’s complications, causing late payments and rising balances. After the hardship, they re-established on-time payment history and reduced utilization. With credible documentation, seasoned derogatories, and solid residual income, their VA purchase closed.
Results vary. Past approvals do not guarantee future outcomes. All loans are subject to credit approval, appraisal, and underwriting conditions.
Manual underwriting: how low-score approvals actually happen
When automated systems do not return Approve/Eligible, many lenders stop. We don’t. A manual underwrite allows an underwriter to evaluate the full narrative: payment patterns, income stability, residual income, extenuating circumstances, and compensating factors. This holistic approach is how complex, low-score files earn approvals.
Reference: VA Lenders Handbook, Chapter 4
What compensating factors can offset low credit?
- Residual income comfortably exceeding VA thresholds
- Low debt-to-income ratio relative to stable, verifiable earnings
- On-time housing history (rent or mortgage) with documentation
- Seasoning and credible context for derogatory items
- Cash reserves or verified access to liquid funds
- Longer, stable employment tenure and consistent hours
- Re-established payment performance after hardship
Does VA require a perfect 12 months of on-time payments?
A clean most-recent 12 months is ideal but not required. VA guidance places significant weight on the latest 12 months, yet it does not mandate automatic denial if a derogatory entry exists within that window. When late payments in the last 12 months can be justified by documented extenuating circumstances or financial hardships that have been overcome, the file may still be approvable under manual underwriting.
What matters is severity, timing, cause, correction, and whether compensating factors outweigh the blemish. An isolated, well-explained 30-day late that was promptly corrected can still align with “satisfactory credit risk” when residual income is strong and the narrative is credible.
Reference: VA Lenders Handbook, Chapter 4
High-value Q&A
What’s the real minimum credit score for a VA loan?
The VA does not publish a minimum score. “620” and “580” are lender overlays. We assess files below those numbers and prepare manual underwriting when the overall profile supports approval. VA Handbook, Chapter 4.
Can I get a VA loan with a 500 FICO? What about the 400s?
It depends on the total picture. We have closed purchases in the 480s where residual income, recent payment stability, and credible documentation supported the risk. Not every file at that score level qualifies. The last 12 months of behavior carry extra weight but are not an absolute barrier if properly justified and overcome.
Do collections or charge-offs automatically kill a VA loan?
No. Underwriters weigh type (e.g., medical vs revolving), age (seasoning), amount, and behavior since. Older medical collections, fully explained and seasoned, are assessed differently from fresh revolving lates. The narrative and current performance are key. VA Handbook, Chapter 4.
Can I qualify after bankruptcy?
Often yes, with seasoning and re-established behavior. Underwriters evaluate whether the borrower now represents a satisfactory credit risk. Evidence of stability and residual income can outweigh past damage.
What about a foreclosure, deed-in-lieu, or short sale?
Not automatic denials. If sufficient time has passed and current payment behavior is consistent, an underwriter can consider approval under manual guidelines, especially with strong compensating factors.
What if I have delinquent federal debt?
Delinquent federal obligations must be resolved or under a documented repayment plan prior to closing. We address these items early to avoid delay. VA Handbook, Chapter 4.
What if I have limited tradelines or no score at all?
Nontraditional credit (rent, utilities, insurance) can demonstrate payment history. Documented obligations often matter more than a particular score. VA Handbook, Chapter 4.
Why do some lenders refuse manual underwriting?
Many impose overlays and rely on automated findings to control risk and turn times. We evaluate, document, and submit well-built manual files when appropriate, including full narratives and residual analysis.
Will my interest rate be higher with lower credit?
Pricing generally reflects risk. Our approach is to secure responsible approval with sustainable payments, then plan for pricing improvement as credit strengthens.
How to strengthen a low-score VA file in 30/60/90 days
Next 30 days
- Pull a full tri-merge report and correct reporting errors
- Reduce revolving utilization by paying down balances strategically
- Document on-time housing and utilities history
- Draft hardship and explanation letters tied to dates and evidence
Next 60 days
- Stabilize monthly cash flow; avoid new discretionary debt
- Maintain on-time payments across all open accounts
- Add a properly structured tradeline if depth is thin (when appropriate)
- Organize income documentation for stable year-to-date patterns
Next 90 days
- Accumulate reserves where possible
- Finalize documentation for a manual underwrite
- Lock employment verification and residual income analysis
Our process for low-score VA approvals
- Data first: complete credit, income, assets, rent history.
- Risk drivers: categorize derogatories by age and type; map compensating strengths.
- Documentation plan: build hardship and re-establishment narratives with evidence.
- Residual analysis: confirm margin above VA thresholds; stress-test the budget.
- Submission path: run AUS when viable; prepare a manual underwrite when narrative wins.
- Iterate fast: satisfy conditions, clarify points, keep underwriting dialogue tight.
- Close & coach: finalize; plan post-closing steps to improve pricing later.
Common myths we retire permanently
- “VA requires 620.” False. That’s an overlay, not VA policy.
- “580 is the minimum for VA.” Also false. Another overlay.
- “Collections or bankruptcy are automatic denials.” Not under VA; context and seasoning matter.
- “Manual underwriting is dead.” It’s alive and effective when documented correctly.
- “One late in the last year kills the loan.” Not automatically. If a late is justified by extenuating circumstances that have been overcome and strong compensating factors exist, approval is still possible under manual guidelines.
Reference: VA Lenders Handbook, Chapter 4.
Why the JD.Mortgage team at PRMG
- No overlays. We evaluate files against VA guidance, not internal cutoffs.
- Manual underwriting expertise. We use it when your narrative and residual support approval.
- Proven edge cases. We have closed purchases with scores in the 480s when the full profile supported it.
- Nationwide reach. 49 states (excluding NY).
- Straight talk. Clear expectations, documented steps, responsible lending.
Ready to have your VA file evaluated without overlays?
Send us your scenario. We’ll review the full picture, outline a clear plan, and tell you exactly what it will take to move forward under VA guidance.
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