Collections aren't the end of the world for VA Loans


Collections Don’t Automatically Kill a VA Loan

One of the biggest myths out there about VA loans is that having a collection account on your credit report automatically disqualifies you from getting approved. The truth is—it doesn’t.

The VA loan program is designed to be flexible and Veteran-friendly. While lenders do take collections into account, the bigger focus is on your overall financial picture, including:

  • Residual Income – After your mortgage payment and other debts, how much money do you have left each month for everyday living expenses? VA guidelines put a strong emphasis here because it shows whether you can realistically afford your home.

  • Payment History & Risk – A collection in the past doesn’t necessarily mean you’re a high-risk borrower. Lenders look at whether your recent payment history shows stability, whether the collection was a one-time event, and whether you’ve recovered financially.

  • Compensating Factors – Things like steady income, cash reserves, or a strong employment history can outweigh a collection account.

What This Means for Veterans and Active Duty

If you have a collection on your credit report, don’t assume you’re out of the game. VA loans give room for real-life circumstances—medical bills, old accounts, or temporary setbacks happen. The key is to get a quick review from a VA-savvy lender who understands how residual income and risk analysis work.

Bottom Line

Collections don’t automatically kill a VA loan. What matters most is your ability to repay, the strength of your residual income, and how the overall risk profile comes together. Before you count yourself out, talk with a lender who specializes in VA lending and can guide you through the process.

Next Step: Ready to see where you stand? Reach out today for a quick review. A 10-minute conversation could be the difference between putting homeownership on hold—or getting the keys to your new home.

About Between Two Doors
Between Two Doors is a podcast where I talk with Realtors about their journey, aiming to connect home buyers and sellers with agents on a more personal level. I ask "right brain" questions that go beyond transactions, focusing on the experiences, values, and passions that make these professionals great at what they do.

Listen to more episodes at: https://www.betweentwodoors.com

Sponsored by:
Premier Lending, Inc.
https://www.natecarver.com

NMLS Numbers:
NMLS: 2004738
Licensed by the Department of Financial Protection and Innovation (DFPI). Equal Housing Opportunity.
https://www.nmlsconsumeraccess.com

Contact: 972-832-5761

Follow Us on Social Media:
Facebook: NateCarverTheMortgageGuy
LinkedIn: Nate Carver
Twitter: NathanC90662223
TikTok: nateyourfavmortgageguy
YouTube: Between Two Doors

Location: United States

Comments

Post a Comment

Popular posts from this blog

Meet Ashley Hart: North Texas Real Estate Expert Redefining Real Estate and Resilience

Image
  Meet Ashley Hart: North Texas Real Estate Expert If you’re looking to buy or sell a home in Flower Mound, Texas, or the North Dallas Metroplex , you need to meet Ashley Hart . With a background in marketing and architecture, she has taken the real estate industry by storm, making a name for herself as one of the top 1% of agents in her market. From Marketing to Real Estate: Ashley’s Journey Ashley’s journey into real estate started while she was working as a marketing coordinator for her father’s architecture firm . At the same time, she and her husband were investing in properties. To save on agent commissions, her husband suggested she get her real estate license. Once she started taking classes, she realized real estate was a perfect combination of her skill sets —marketing, customer service, and business management. In March 2019, Ashley earned her real estate license and embarked on her new career. The first year was tough—Ashley had zero clients . But through perseverance,...
Read more

Between Two Doors: A Conversation with Tracey Goens – Heart, Homes, and Hope in Daphne, AL

Image
  In this episode of Between Two Doors , I had the pleasure of sitting down with Tracey Goens, a top-producing Realtor and lifelong Baldwin County resident who’s built her real estate career on heart, hustle, and an unwavering commitment to community. From the moment we started talking, it was clear that Tracey doesn’t just sell homes—she builds lasting relationships. With nearly 20 years in the industry and a place among the top 1% of Baldwin County Realtors, she blends expertise with a personal touch that turns transactions into lifelong friendships. A Local with Deep Roots and a Heart for Service Tracey’s real estate journey began in Daphne in 2005, and she’s never looked back. What drew her in wasn’t a love for houses—it was a love for people. She finds joy in learning about her clients’ lives, hearing their stories, and helping them through major life transitions with grace and empathy. Whether it’s a first-time homebuyer, a couple navigating a divorce, or a growing family,...
Read more

Housing Market Analysis Empowering Realtors, Homebuyers & Sellers with the Latest Insights: May 16th 2025

Image
  Housing Market Analysis Empowering Realtors, Homebuyers & Sellers with the Latest Insights: May 16th 2025 1. Mortgage Rates in a Rangebound Market Even with daily headlines about inflation, tariffs and fiscal policy, 30-year rates have hovered between high-6% and just under 7%: May 14, 2025 national average: 6.86% (30-year fixed) 15-year fixed average: 6.08% Rates have remained “rangebound” despite CPI prints and jobs data Fed’s pause on benchmark changes keeps markets in a “wait-and-see” mode What this means: Buyers know the range. Competitive pricing and rate-buy-down strategies can keep your clients in the “sweet spot” below 7%   . 2. Strong Purchase Demand Persists Contrary to many forecasts, mortgage demand continues to hold firm—even with higher rates: New listings have normalized as spring winds down Demand has stayed between 7.25%–6.64% all year Realtor tip: Share this narrative with prospects—rates aren’t chasing buyers away What thi...
Read more