Step one when pursuing a VA-backed home loan is to obtain your Certificate of Eligibility. This is the document the VA provides to you, or your lender, that confirms that you qualify for a VA-backed home loan. The Certificate of Eligibility can be obtained by completing a VA Form 26-1880 (which is available through the VA’s website. However, your private lender can often obtain the Certificate of Eligibility on your behalf. While having your lender obtain the Certificate of Eligibility for you is often the quickest and most simple route, many veterans and service-members opt to obtain the Certificate of Eligibility themselves as it makes it easier for them to ‘shop’ other lenders instead of being bound to any particular lender.
While the VA doesn’t require a specific credit score from an applicant using their home loan backing system – the private lender you decide to use may (and often will). Regardless of whether the lender has a specific credit score in mind, they’ll go through an underwriting process that will include reviewing your existing debt/expenses and your income. While the lender will walk you through this process, attempting to gather documentation in advance can save both you and the lender time and keep the process as streamlined as possible.
If your credit score or debt versus income ratio are of concern, though – you do have options to improve them. First, you may consider contacting one of the VA’s Regional Loan Centers for advice or assistance. Second, you’ll want to review your credit report to check for any mistakes or errors that have negatively (but inaccurately) reflected on you. Third, you may see if you can increase your income through varying means (part-time or freelance work, for example).