Do you only offer VA loans?

I am a full service mortgage broker. Although VA is the majority of what I do, I also have other mortgages like FHA, Conventional, USDA and Non QM.

Do you only service the Dayton and Cincinnati markets?

Dayton and Cincinnati are the majority of my business. However, I'm authorized to offer mortgage loans in 40 states. For loans outside of these areas, I can refer them to friends in the business.

Can You Get A VA Loan With Open Collections On Credit?

One of the common questions I encounter as a loan officer is, “Can I get a VA loan if I have open collections on my credit?” This is a pertinent question, especially for veterans seeking housing assistance. The answer is that it can depend on several factors, including the type of collections you have and the interpretation of various lenders.

Key Takeaways

Flexible Underwriting Guidelines: VA loans are generally flexible, allowing for some collections on your credit report, but approval depends significantly on the type of collections and your overall financial situation.
No Specific Collection Guidelines: The VA does not provide strict guidelines regarding open collections, leading to varying interpretations by different lenders and underwriters.
Impact of Different Types of Collections: The nature of collections matters; medical collections are typically viewed leniently, whereas child support or recent credit card collections can create significant hurdles in securing approval.

Take the 30 second mortgage quiz to see if you qualify

Understanding VA Loan Flexibility

VA loans are designed to be flexible to help veterans secure financing. However, one major requirement is that if you have collections on your credit report, you cannot have any recent rental or mortgage late payments. For rental history, there is a two-year waiting period with no late payments or evictions. Likewise, if you are buying a new home and have mortgage history, you will need a one-year wait with no late payments. These timeframes can sometimes be reduced with extenuating circumstances, such as job loss or medical issues.

Types of Collections and Their Impact

While the VA does not provide specific guidelines for open collections, a lot of this process comes down to lender discretion and judgment. Here are how different collections typically play into the VA loan approval process:

Medical Collections: Generally, medical collections are viewed as less severe due to the common understanding that healthcare costs can be unpredictable. They are unlikely to severely impact your loan approval.
Child Support Collections: If you have outstanding child support collections, you may face significant challenges in securing a VA loan, as child support obligations can lead to wage garnishments and a complicated financial profile.
Credit Card Collections: Recent collections on credit cards can hinder your approval chances, especially if they occurred within the past year. If these collections are older than a year and you have demonstrated a positive payment history otherwise, your chances of approval improve.
IRS Collections: If you have IRS collections, it is beneficial to be on a payment plan. Lenders typically prefer to see you actively managing your obligations.
Utilities and Other Small Collections: Smaller collections, like those from utility companies, tend to be more lenient, especially if they are minor amounts (e.g., under $200). In some cases, these collections can be overlooked, particularly if there is an explanation provided.

Take the 30 second mortgage quiz to see if you qualify

Final Thoughts

In summary, while obtaining a VA loan with open collections on your credit is feasible, it heavily depends on the type of collections and the interpretation of the lender. The key is to shop around to find a lender who can work with your unique financial situation.

Have questions about VA home loans? Click here to contact me.

Licensing Info

I can originate VA mortgage loans anywhere that I’m licensed. I’m licensed in Alabama, Arkansas, Arizona, California, Colorado, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, and Wisconsin. Additionally, our team can originate mortgages in several additional states through our corporate referral program.

How To Get A VA Home Loan With Bad Credit

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Carlos Scarpero

Carlos Scarpero is the founder of Scarpero.com and a mortgage loan officer focusing on VA and Non QM mortgage loans. He is also the author of VA Loans Made Easy.