by Joseph Flannery | Sep 14, 2018
You applied for an FHA or VA loan, but your lender said your credit score is too low.
Here is the number one thing you need to know: The minimum credit score may be a lender overlay.
What are Lender Overlays?
Lender overlays are more stringent standards than investor guidelines set by Fannie Mae, FHA, and VA.
The most common lender overlay is minimum credit score.
Did you know that the true minimum credit score for FHA and VA loans is 500?
Most lenders will tell you that the minimum credit score is higher, often they say 580. But that is not true. It’s their minimum credit score.
Often lenders hide this fact because they hope you return to them when your credit score improves. Don’t wait.
Even with a credit score of 500, you can still get a terrific fixed rate.
Get Matched with No Overlay Lender
“SELFi started with a simple idea: to offer the absolute lowest interest rates. That's it.”
The Real FHA and VA Guidelines (don’t let a lender tell you different)
FHA Purchase: The minimum credit score is 500. Your qualifying score is middle of your three scores from credit bureaus Equifax, Transunion, and Experian.
- For credit scores between 500 – 579, the minimum down payment is 10%
- For credit scores of 580 and above, the minimum down payment is 3.5%
FHA Cash-Out Refinances:
- For credit scores of 500 and above, the max cash-out is 85% of the appraisal value
FHA Streamline Refinance:
- There is no minimum credit score. You can streamline without even having a lender look at your scores
VA Down Payment:
- For credit scores of 500 and above, you can buy with 0% down
VA Cash-Out Refinances:
- For credit scores 500 and above, you can take cash-out up to 100% of the appraised value
VA Interest Rate Reduction Refinance Loan (IRRRL):
- There is no minimum credit score, lenders are not required to look at your scores.
Get Matched
Don’t stop shopping just because one lender said your credit score was too low. It may be their overlay.
The Bottom Line
FHA and VA have set guidelines, however, lender overlays make it more stringent to qualify. Not all lenders have overlays. Make sure to shop around.
Do not miss the opportunity to take cash-out or buy your dream home just because one lender has an overlay.
Learn more about getting an FHA or VA loan with a low credit score here.
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Angela D Haleon June 5, 2020 at 1:47 pm
My husband is a veteran and we filed bankruptcy two years ago. We managed to keep our home and our mortgage rate is 5%. Our credit score is 510 but should increase now that we are in good standing with our creditors
Dennis amburnon February 1, 2021 at 3:58 am
All my credit is excellent with the acception of 2 credit cards that I was scammed on. I refused to pay for the purchases and this damaged my credit score. It dropped to 520 from 720. At no fault of my iwny.
Lavern Blueon June 6, 2020 at 1:41 am
Hi, my average credit score is about a 560 and I wanted to k ow if I am eligible for getting a VA Loan
Renee Hutchinson June 8, 2020 at 1:17 pm
Who can we use to get Va. Loan with credit score around 550?
michael santilloon July 15, 2020 at 9:56 pm
i;m a 100%disabled with 49000 a month income my credit is 556 I need to refiance our home to take out cash to pay off bills,
Randy Robleson June 10, 2020 at 3:07 pm
Do you have a list of lenders that go buy these guidelines as all the lenders that I have called has told me a higher score
Angelon June 20, 2020 at 11:35 pm
could you point me to the right direction in order to find a lender that’ll give me a VA loan for a first time home buy in FL??
Leonard Mackon August 26, 2020 at 11:47 pm
Do lenders go by the veterans credit score only or the veteran and spouse credit score?My score is 530 and my spouse is 670.
Graceon June 23, 2020 at 10:45 pm
what Banks/credit unions in west virginia can do a VA loan without a lender overlay on credit scores? Our scores range from 557-600
Beverly Morenoon July 21, 2020 at 7:22 pm
Can you direct me to someone who will refinance my loan with a 510 credit score? I have tried a lot of places but they say my score is too low.
Jessica Shaverson March 3, 2021 at 2:44 pm
Hello,
I need help finding a realtor or lender. I have my COE and I am ready to find a home. My credit score is 554 on all 3. Can you help me find someone to help me?James howardon September 24, 2021 at 5:19 pm
How do you get a COE for a va home loan
Kevin Skarsonon July 23, 2020 at 12:59 pm
My credit score is between 550 and 580 who can I get a va loan from to get a house?
Elizabeth B Starkson July 28, 2020 at 5:26 pm
Where can I find a lender for a VA loan with a score of 593
ROBERT GARRETT SRon July 28, 2020 at 10:41 pm
I Robert need a loan to pay bills and remortgage
Cole Malleryon July 29, 2020 at 11:46 pm
could you point me to the right direction in order to find a lender that’ll give me a VA loan for a first time home buy in PA
GEOFF Stigerson August 24, 2020 at 7:24 pm
I am looking to buy a house in 67005. The bankruptcy was cleared 2 years ago, but my scores aren’t moving up very fast. Can you point me to a lender who deals with veterans who have a score in the 500 – 550 range.
James J Austinon August 27, 2020 at 5:25 pm
Could you give me a list of lenders for va loans that don’t have overlays it would be very helpful. Thank you.
Ramon D Boykinson September 1, 2020 at 1:44 pm
What are some lenders that will accept 500 credit score?
Jason Fryon September 14, 2020 at 7:23 pm
I need a lender for va loan in the state of GA asap. Credit 578 as the highest of the three. House already found owner is waiting for contract. Please help us.
Bridgeton March 3, 2021 at 10:53 pm
For those of you with low credit score, who are searching for a lender who would be willing to service your VA home loan, research Sub-Prime lenders and also contact Loan Cabin to see if they can help you all.
Be blessed!
Dennis Andrewson August 20, 2021 at 2:10 am
you send out all the messages to these va lendors and none call you back
