Bad Credit VA Loans in Michigan

Take the 30 second mortgage quiz to see if you qualify

Are you looking to get a VA mortgage loan in Michigan but have bad credit?

I can help. I am a VA Mortgage Specialist.

The vast majority of the mortgage loans that I originate are VA home loans and many of these loans are for veterans with bad credit.

Working through Edge Home Finance, LLC, a mortgage broker, with 150 different lenders to choose from, I have several options for bad credit VA loans in Michigan.

Michigan veterans rebuilding after a rough stretch should read the national guides linked from my bad credit VA loan hub before writing off the idea.

VA home loans have the following benefits.

Buy A Home With No Money Down
Lower Closing Costs
Lower Rates
Easier Underwriting Than Conventional and FHA
Easy Refinancing Available
No Minimum Credit Score
Prior Bankruptcy or Foreclosure Are Ok

I am proud to have completed the Vetted VA certification program.

Vetted VA is a program that allows loan officers to demonstrate that they have superior knowledge of the VA mortgage program.

Less than 1% of loan officers out there have completed this certification.

The Vetted VA program also provides me a network of loan officers all around the country that can help. This means that any help needed to get the loan closed in a timely manner will get figured out quickly and easily.

Take the 30 second mortgage quiz to see if you qualify

Bad credit VA loans in Michigan are more available than most veterans are told, because VA does not set a minimum credit score at all. The floor you were quoted in Detroit, Grand Rapids or at Selfridge is that lender's overlay, not a VA rule.

Michigan's own debt law has a wrinkle that catches veterans off guard. The debt itself goes out of reach after six years, but if a creditor already took you to court, the judgment lasts ten years and can be renewed for another ten. Those are two different clocks, and the one that matters to your file depends on which side of a courthouse your old account ended up on.

I am Carlos Scarpero, a Mortgage Loan Originator licensed in Michigan, and most of what I originate is VA loans.

On this page

What credit score do you need for a VA loan in Michigan?
How long do you have to wait after late payments?
How collections and charge-offs are counted
Michigan: six years on the debt, ten on a judgment
Whose credit gets pulled on a Michigan file
What offsets weak credit on a Michigan file
Real files: the issue, and what we did about it
Common questions

Take the 30 second mortgage quiz to see if you qualify

What credit score do you need for a VA loan in Michigan?

There is no VA number. This is the most misunderstood thing in VA lending, so here is the source rather than my summary of it.

VA Handbook Excerpt

“VA does not have a minimum credit score requirement.”

That is the entire sentence, out of Chapter 4. Anything a lender adds on top is called an overlay, and overlays are business decisions rather than VA policy. One lender’s 640 floor and another lender’s 580 floor are both fully consistent with VA rules.

Source:

VA Lender’s Handbook (VA Pamphlet 26-7) – Chapter 4, Topic 7: Credit History – Required Documentation and Analysis

On Michigan files the overlays I see usually sit between the upper 500s and the low 640s. Michigan is also home to some of the largest retail mortgage operations in the country, and a big shop's published floor is the easiest thing in the market to mistake for a VA rule. Working through Edge Home Finance, LLC as a mortgage broker, I can shop the same file against several lenders' overlays instead of accepting one bank's single answer.

No minimum score does not mean everyone is approved. It means VA leaves the credit judgment to the lender and to the underwriting rules below. Every file is different, and nothing on this page is an approval or an offer of credit.

How long do you have to wait after late payments?

This is where a lot of published advice, including advice from loan officers, gets the timing wrong.

VA Handbook Excerpt

“In circumstances not involving bankruptcy, satisfactory credit is generally considered to be re-established after the borrower(s), have made satisfactory payments for 12 months after the date the last derogatory credit item was satisfied.”

Read the timing. The 12 months runs from the date the derogatory item was satisfied, not from the date it happened. A collection from three years ago that you paid off eight months ago started your clock eight months ago, not three years ago. That distinction moves closing dates.

Source:

VA Lender’s Handbook (VA Pamphlet 26-7) – Chapter 4, Topic 7: Credit History – Required Documentation and Analysis

Plan on 12 clean months, not on the exception

Plenty of lenders apply a stricter version and want 12 months with no lates at all. That stricter reading is a lender overlay, not a VA requirement. It is a common overlay, so expect to meet it in most places, but do not let anyone tell you VA mandates it.

What "extenuating circumstances" means now

VA removed the phrase "extenuating circumstances" from the handbook. The concept survives as circumstances beyond the borrower's control, and divorce is specifically not treated as one. Lenders still use the old term informally when they waive an overlay for a documented hardship.

How collections and charge-offs are counted

One Chapter 4 rule decides a lot of these files, and it gets misapplied in both directions: a non-medical collection with no payment arrangement is counted at 5 percent of the balance divided by 12 months. A $4,800 collection therefore adds about $20.00 a month to your debts, not five percent of it every month.

That one line is often the difference between a file that works and a file that does not, because the wrong reading inflates your debt load by an order of magnitude. If a lender tells you a collection disqualifies you on payment size alone, ask which rule they are applying.

Two more Chapter 4 rules on the same subject, worth knowing before you start paying things off in a panic:

Medical collections are treated differently. Lenders may disregard identifiable medical collections, including charge-offs, that have not been reduced to a judgment or lien, and those accounts do not have to be paid off as a condition of approval.
An isolated non-medical collection is not a decline. The handbook says a report showing numerous satisfactory accounts and one or two unpaid collections would preferably have those collections paid, but that it is not necessarily a requirement for approval. A history of such accounts is the harder case.

Michigan reports carry a lot of old municipal, utility and hospital collections. The medical ones are the category lenders may disregard, so getting those separated out of your report early usually removes more perceived risk than paying anything off does.

Michigan: six years on the debt, ten on a judgment

Michigan runs two separate clocks, and veterans routinely quote the wrong one.

Six years to sue on the debt. MCL 600.5807(9) sets a six-year period of limitations for an action to recover damages or money due for breach of contract that is not one of the special cases listed earlier in that section. Ordinary consumer debt is breach of contract, so six years is the number.
Ten years on a judgment, renewable. MCL 600.5809(3) gives ten years on an action founded upon a judgment of a Michigan court of record, and says in as many words that within that period an action may be brought upon the judgment for a new judgment. So a creditor who sued you and won can keep that judgment alive well past the point where the underlying debt could have been sued on.

That distinction is the practical one on a Michigan mortgage file. An old collection is usually a credit-report problem. A live judgment is a title and closing problem, because an unsatisfied judgment can attach as a lien against real property and has to be dealt with before you close, regardless of what Chapter 4 says about collections.

Two cautions. The six-year deadline is a defence you have to raise, not something that stops a suit being filed, and a payment or written acknowledgment can restart the clock on an old account.

The credit-reporting clock is separate and federal, under the Fair Credit Reporting Act, generally about seven years for derogatory items. I am a loan officer rather than a lawyer, so take legal advice before you pay or dispute anything old. What the handbook requires of the loan file is below.

The statute of limitations figures on this page were verified against the primary statute in September 2026.

Source: MCL 600.5807, period of limitations on contract actions (six years, subsection 9)

Source: MCL 600.5809, judgments (ten years, renewable for a new judgment)

Whose credit gets pulled on a Michigan file

Michigan is not a community property state, so a spouse who stays off the loan normally stays out of the credit decision entirely. The rule comes from ECOA, and Chapter 4 spells out the exception:

VA Handbook Excerpt

“ECOA prohibits requests for, or consideration of, credit history and liability information of a spouse who will not be contractually obligated on the loan, except: if the borrower(s) is relying on alimony, child support, or maintenance payments from the spouse (or former spouse), or in community property states.”

Michigan is not one of the nine community property states, so the exception does not apply to you. A spouse who will not be contractually obligated on the loan normally stays out of the credit pull and out of the debt calculation. In a community property state such as Texas the lender must pull that spouse’s credit and count their monthly debts on the loan analysis.

Source:

VA Lender’s Handbook (VA Pamphlet 26-7) – Chapter 4, Topic 5a: Verification Requirements for Debts and Obligations

Two things follow from this. First, if the damaged credit in your household is your spouse's rather than yours, applying alone is a real option in Michigan in a way it is not in Texas or California. Second, the handbook is clear that even where a non-purchasing spouse does come into the file, their score does not become yours:

VA Handbook Excerpt

“A Veteran borrower with a satisfactory credit history may be considered a satisfactory risk even though the non-purchasing spouse's credit may be unsatisfactory.”

Worth keeping in your back pocket if a lender treats a spouse’s credit as an automatic decline. Their score is not your score.

Source:

VA Lender’s Handbook (VA Pamphlet 26-7) – Chapter 4, Topic 5a: Verification Requirements for Debts and Obligations

If you and your spouse both need to be on the loan for income reasons, then both credit reports are in play and the analysis changes. That is a conversation worth having before anyone pulls credit.

What offsets weak credit on a Michigan file

When credit is the weak spot, the underwriter looks for compensating factors, and Chapter 4 names high residual income as one of them. Residual income is VA's signature test: what is left each month after the mortgage, the escrow, your debts and your taxes come out.

Michigan sits in VA's Midwest residual income region. For a loan of $80,000 or more, the guideline is $441 a month for a family of one, $738 for two, $889 for three and $1,003 for four, adding $80 for each additional member up to a family of seven. Clearing that number with room to spare is one of the strongest arguments available to a file with damaged credit. You can run your own numbers on my VA residual income calculator and my VA mortgage payment calculator.

Michigan sits in the Midwest region, and at $80,000 and above the Midwest and South tables carry identical figures, so anyone quoting you a different Michigan number is quoting the under-$80,000 table. Michigan prices also mean plenty of loans land under that $80,000 line, where the lower table applies. Ask which one your file is being measured against.

The other factors that carry weight on a rough-credit file are a documented reason for what went wrong, a clean recent payment history on housing, stable time in the same line of work, and money left in reserve after closing. None of those is a score.

Real files: the issue, and what we did about it

Here is what damaged credit looks like in practice, from files I have worked. Details are anonymized, and the lesson in each one is the part that transfers to your situation.

Real file: A repossession, and everything that came after it

The problem. A vehicle repossession sat on the report from more than a year earlier. The borrower assumed it was an automatic no.

What we did. We looked at what the handbook actually cares about: how old the event is, whether it was satisfied, and what the payment history looks like since. His history since the repo was clean, which is the argument.

How it ended. The underwriter's next step was proof of when the deficiency was satisfied, so the twelve-month clock could be dated, plus statements covering the clean period since. That is where that file stood.

Old damage reads differently than recent damage, if you can date it.

Real file: A recent collection the borrower never actually owed

The problem. A small utility-type collection had hit the report in the last few months, from a billing dispute after the borrower had already cancelled the service. It was recent, and recent is what hurts.

What we did. We documented the dispute itself: the cancellation, the billing records, and the correspondence, and presented it as a disputed item rather than asking anyone to ignore it.

How it ended. The lender granted an exception on that item. Note what did not happen: the collection was not deleted, and a documented dispute is not a deletion.

A dispute you can document can be considered. A dispute you only remember cannot.

These are real files from my own pipeline, with names, dates, amounts and identifying details removed or changed. Every file is different, and nothing here is an approval or a promise of one.

Rough credit file? Take the 30 second quiz

Bad credit VA loans in Michigan: common questions

What credit score do I need for a VA loan in Michigan?

VA does not set a program-level minimum credit score. Individual lenders set their own floors, and on Michigan files those usually land somewhere between the upper 500s and the low 640s. That floor is a lender overlay rather than a VA rule, which is why the same file can be declined at one lender and approved at another.

How long after a late payment can I get a VA loan in Michigan?

Chapter 4 of the VA Lender's Handbook says satisfactory credit is generally considered re-established after 12 months of satisfactory payments following the date the last derogatory item was satisfied. Read the timing carefully: the clock starts when the item was resolved, not when you were late. Many lenders apply a stricter clean-12-months reading, and that stricter version is an overlay.

Does my spouse's bad credit stop me from getting a VA loan in Michigan?

Generally no. Michigan is not a community property state, so under the ECOA language quoted in Chapter 4 the lender does not pull a credit report on a spouse who will not be contractually obligated on the loan, and that spouse's debts do not come into your loan analysis. The answer would be different in a community property state such as Texas or California.

Can a collector still sue me over an old debt in Michigan?

Michigan generally allows six years on the written contracts that most consumer debts are built on, with a shorter window for accounts that are not in writing. The deadline is a defence you have to raise, not something that stops a suit from being filed, and the credit-reporting clock under the Fair Credit Reporting Act is a separate federal question. The statutes are linked in the section above. I am a loan officer rather than a lawyer, so take legal advice before you pay or dispute an old account.

Will a collection account stop a VA approval?

Not automatically. Chapter 4 says isolated non-medical collection accounts do not necessarily have to be paid off as a condition of loan approval, and a non-medical collection with no payment arrangement is counted at 5 percent of the balance divided by 12. Identifiable medical collections that have not become a judgment or lien may be disregarded entirely. What sinks files is a pattern of recent unresolved accounts, not one old collection.

Are you licensed in Michigan?

Yes. Carlos Scarpero is a licensed Mortgage Loan Originator, NMLS #1674385, working through Edge Home Finance, LLC, NMLS #891464. Michigan is one of the states where I hold an active licence.