The difficulty of obtaining a loan to buy a home may have risen, but VA loans with bad credit are still available. The credit crunch has created an environment where home financing has become more difficult, especially for conventional mortgage loans. However, mortgages for military veterans are still available, and offer 100% financing as well. Most of these VA mortgages can be obtained with tarnished or even bad credit because the VA guarantees the loan to the lender or bank, and VA has not tightened their guidelines.

Mortgage lenders have increased their credit score requirements for most loans, but for VA loans, that is generally not the case. Someone with a low or bad credit score may still be able to secure home financing even if there score does not qualify them for conventional financing.

VA loans with bad credit are also available for qualified veterans even if they have no money to put down. VA allows the veteran to finance 100% of the purchase price, and in some instances (such as for EEMS - Energy Efficient Mortgages) the veteran can finance the cost of improvements on top of the price. VA loans also allow the seller of the home to pay part or all of the buyer's closing costs, taxes and insurance. This enables the buyer to purchase a home with literally no out of pocket expense.

VA loans are available as 30 year and 15 year fixed rate loans. Usually the rates on these mortgages are comparable to market rates on "regular" or conventional loans that require down payments of 5% or more.

The major difference, other than the down payment requirement, between a VA loan and a conventional loan is the lack of Private Mortgage Insurance (PMI) on a VA mortgage. Conventional loans with less than a 20% down payment require an extra insurance (PMI) portion of the montly mortgage payment that protects the lender against default or the buyer/borrower from not making payments. VA loans have a funding fee (usually a percentage of the loan amount, about 3%) that the buyer finances as part of the loan. This is a one-time fee and replaces the monthly PMI payment on the loan, thereby potentially saving the Veteran thousands of dollars over the life of their mortgage.

Home financing has changed in the last few years but VA loans with bad credit are still widely available and obtainable.