- Explain residual income and why VA underwriters lean on it
- Describe VA's flexibility on collections and medical debt
- List VA waiting periods after Ch. 7, Ch. 13, and foreclosure
- Identify lender overlays vs. VA Handbook rules
No Minimum Score — But Lenders Set One
The VA Lender's Handbook does not state a minimum score. Practically every lender requires 580–620. Veterans with thinner files get more flexibility because of residual income.
Residual Income
After paying the mortgage, taxes, insurance, and recurring debts, the veteran must have a minimum dollar amount left over each month based on region and family size. A strong residual income can compensate for a thin or bruised credit file.
Waiting Periods
- Chapter 7 — 2 years from discharge
- Chapter 13 — 1 year of on-time plan payments
- Foreclosure — 2 years (1 year with documented extenuating circumstances)
- VA loan foreclosure with entitlement loss — entitlement must be restored before re-use
- VA itself sets no FICO floor; lender overlays land at 580–620.
- Residual income is the VA's safety net for marginal credit files.
- Foreclosure seasoning on VA is shorter than FHA (2 vs. 3 years).
Module 3 Exam — 5 questions
Pick the best answer for each question. Pass with 80% or higher to mark this module complete.
- 1.
Per the VA Lender's Handbook, the minimum FICO score is:
- 2.
Residual income is best described as:
- 3.
Waiting period after Chapter 7 discharge for VA is:
- 4.
VA waiting period after a non-VA foreclosure is:
- 5.
A veteran with a 590 FICO and strong residual income is most likely to succeed with a lender that:
0 of 5 answered