Does a VA home loan, help people with bad credit? Can you purchase a HUD home with a VA mortgage?

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There is an HUD home for around $ 30000, my husband an i are thinking about purchasing, we’d need a mortgage for around $ 50000. We don’t have good credit, can a VA loan help with that? Any other suggestions?
Just to clarify, the house is valued at $ 78000, but has been on the market for 2 years, which is why the broker has lowered the price to 30000.

Which is the better deal?? Why?
Thanks!!
my fiance is a veteran with a low score, i have the good credit score. we both make great money, and we have about $ 30,000 saved. we would by the home in only one of our names if it would help the interest rates…

5 Comments
  1. Reply
    xstitchmama
    January 25, 2011 at 6:35 pm

    A VA loan will let you buy a house with no money down, but I think there are still credit requirements. My husband is eligible but still had something bad on his credit – a collection or something- and we were told we had to wait til it was taken care of. If you have a mortgage broker nearby, one that works with several differerent lenders, they will meet with you, often for free, take a look at your credit and tell you what they can do, or what needs to be done before you will be eligible for a loan.

  2. Reply
    Landlord
    January 25, 2011 at 7:07 pm

    It can help, they are less strict, it just depends on how bad is bad.

    However, there is no way in hell anyone would lend you 50k to buy a 30k house. Even with bright shiny perfect credit this would not be happening.

    The maximum mortgage you could possibly qualify for 30k, purchase amount, but even that much is not likely with bad credit. 24k for the 30k house is more likely.

  3. Reply
    Expert Realtor
    January 25, 2011 at 7:36 pm

    VA home loans are not credit score driven, but banks that fund these loans do have minimum credit guidelines for people with BAD credit (which is very different from no credit).

    Most banks have a 585 minimum mid-score guideline, if you can’t meet that, they won’t underwrite the loan, period.

    A VA loan is simply a loan that is insured. It not a free-for-all subprime alternative.

    PS: No bank, no loan program, allows you to borrow more than the house is worth.

  4. Reply
    Worldly25
    January 25, 2011 at 7:44 pm

    Regular with good credit. Less restrictions

  5. Reply
    taximomuv3
    January 25, 2011 at 8:21 pm

    Your credit score is your credit score – if you can’t qualify for a regular loan with 580, you certainly won’t qualify for a VA – especially since they don’t require a down payment making your payments higher. Any loan with a good credit score is better than the alternative.

    EDIT: Okay – i thought this was a hypothetical question. I think I would check both avenues with both names on the loan and see what offers you get before making a decision. The good thing about a VA is that it’s guaranteed by the government and you may not have to pay for PMI (not sure about that though – be sure and check) if your downpayment isn’t 20% of the property value. Might want to wait until you’re married before committing to a mortgage if both names will be on the title (and of course he would have to be on title for a VA loan regardless) – a lender may be less inclined to approve beforehand if you need both incomes to qualify. They’re so cautious right now, that anything you can do to alleviate their fears will work in your favor.

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