Bad credit home loans no money down? Maybe if you’re a Veteran.

bad credit home loans no money down for veteransI know, it’s the dream of every potential home buyer in today’s post melt-down economy, can you get bad credit home loans with no money down?

Surprisingly, the answer may be yes if you are an active or former member of our military.

Nearly 70 years ago the goverment created the VA home loan guaranty program to assist veterans in obtaining home loan financing.  Surprisingly, this stalwart program continues to help veterans with home loans to this day.

The exciting part of the program is that there are no minimum credit requirements, and there is no money down required.  In essence, the program helps by guarantying 25% of a loan made by a conventional bank or lender.  This gives the lender basically the same reassurances as though you, the buyer, are actually putting 25% down.

Congress created this guaranty program to help level the playing field and extend homeownership opportunities to soldiers returning from World War II. Since 1944, it has helped more than 18 million service members become homeowners.

The VA doesn’t actually provide home financing. Instead, it basically insures a quarter of the mortgage, a layer of protection that gives agency-approved lenders the confidence to not just lend to veterans but to also offer interest rates consistently lower than conventional rates.

While there are no credit minimums or income requirements in the VA program, it’s the lenders who can, and almost always do, introduce their own requirements that go beyond what the VA mandates. That said, qualified borrowers can purchase a home without a down payment, and the VA limits what they can pay in closing costs and lender fees. In the current buyer’s market, seller-paid closing costs mean some veterans can buy a home and not spend a dime up front.

VA loans also feature more forgiving debt-to-income ratios than other loan programs. By the book, this ratio of monthly debt to monthly income shouldn’t exceed 41 percent. But lenders have the flexibility to work well above that threshold provided the borrower clears additional financial hurdles.

To that effect, rather than be a “satisfactory credit risk,” as the VA puts it, lenders want borrowers who can hit a specific credit benchmark; right now it’s a score of at least 620. Veterans with a credit score below that mark will struggle to secure financing…. View the original article, at VA Home Loans Make a Difference for a New Generation

Of course, having better credit will only help you reach your goal of buying a home, and make the interest rate lower.  And, a lower interest rate will yield tens of thousands of dollars of savings over the life of the loan.

However, it is reassuring to know that there are options available if you have bad credit and would like to buy a house with no money down.

Personally, I think this is the least we can do to thank those brave men and women who are willing to sacrifice their lives to protect our freedom.  A thank you, of access to the very American Dream that they have fought so valiantly to protect.

If you agree that our Veterans deserve a program like this, giving them access to home loans regardless of their bad credit, then leave a comment below and share this with your social network.

If you’re not sure of what your credit score is and what’s in your credit file, click here to get your scores from all 3 credit bureaus and your complete file from each.  If you know you have some issues with your credit already, and need some help to fix them, we’d love to help you.

Image by DVIDSHUB via Flickr
About Anthony Candella

Anthony is the founder and Directing Attorney of YourCreditAttorney.com and has been helping consumers just like you understand and improve your credit and financial situation since 2003.

  • Luke

    It’s great to see the benefits that our military servicemen receive. Would this be available for people who are not currently active in the military? I would love to see what housing mortgages could be made for veterans or even people who haven’t served in the military.

    http://www.ralainvestments.com/bad_credit_mortgage.html