How to Get a VA Mortgage in 2025 with a Manual Underwrite and Low Credit Score

If you’re a veteran, active-duty service member, or qualifying spouse with a low credit score, you may be wondering if a VA home loan is still within reach in 2025. The good news? It is — especially with the help of a manual underwrite and a lender that understands your situation.

In this in-depth guide, we’ll explain exactly how to secure a VA mortgage in 2025 even with credit challenges, how manual underwriting works, and how lenders like Forever Home Financing can help you navigate the process.

What Is a VA Mortgage?

A VA mortgage is a loan guaranteed by the U.S. Department of Veterans Affairs (VA), designed to help eligible veterans and military members buy, build, or refinance a home. These loans offer some of the best benefits on the market, including:

No down payment required
No private mortgage insurance (PMI)
Competitive interest rates
Easier credit qualifying standards

To learn more about the program, visit the official VA home loan page.

VA Loan Eligibility Requirements in 2025

Eligibility hasn’t changed much in 2025, but here’s a quick refresher:

At least 90 consecutive days of active service during wartime
181 days of active service during peacetime
6 years of service in the National Guard or Reserves
Surviving spouses may qualify under certain conditions

You’ll need a Certificate of Eligibility (COE) to get started. Learn how to request it here on VA.gov.

Can You Get a VA Loan with a Low Credit Score?

Yes, you can — VA loans do not have a minimum credit score requirement set by the VA. However, individual lenders usually have their own minimums.

In 2025, many lenders prefer scores of 620 or higher, but some, like Forever Home Financing, specialize in helping borrowers with credit scores as low as 500 — especially when a manual underwrite is used.

What Is Manual Underwriting?

A manual underwrite is when a lender evaluates your loan application without automated underwriting software (like Fannie Mae’s DU or Freddie Mac’s LP). Instead, an actual underwriter manually reviews your:

Credit history
Income and employment
Payment patterns
Debt-to-income (DTI) ratio
Compensating factors

This is a more detailed and flexible review that can allow for exceptions — especially for VA loans, where common sense underwriting is encouraged by the VA.

Why You Might Need a Manual Underwrite

Here are common reasons a VA loan application goes to manual underwriting:

Credit score below 620
Limited credit history
Recent late payments or collections
Bankruptcy or foreclosure in the past
Non-traditional income sources

Manual underwriting gives borrowers with “less than perfect” financial profiles a real shot at homeownership — something automated systems often can’t do.

What Lenders Look for in Manual Underwrites

When doing a manual underwrite, lenders consider more than just your credit score. They’ll evaluate:

Payment History

Lenders want to see 12 months of on-time rent or mortgage payments. If you’ve had late payments in the past, a pattern of recent consistency can help.

Compensating Factors

These are positive aspects that strengthen your application. Examples include:

Steady employment for 2+ years
Residual income (leftover money after monthly bills)
Low debt-to-income ratio
Significant savings
No new credit obligations

Residual Income

The VA uses residual income guidelines (based on family size and location) to ensure you can afford your mortgage. This is a big help for lower-credit borrowers.

See VA residual income guidelines here.

Letter of Explanation (LOX)

You may be asked to write a short letter explaining your credit challenges. This can go a long way in a manual review.

Getting Approved with a 500-580 Credit Score

It’s entirely possible to get approved with a score in the 500s — but you’ll need:

Stable income
Low DTI (ideally under 41%)
No recent bankruptcies, foreclosures, or late housing payments
Strong residual income
A lender willing to do manual underwriting

Forever Home Financing works with borrowers in this range and will guide you through a customized action plan if needed.

How to Strengthen Your VA Loan Application in 2025

Here are some smart steps to improve your chances:

Check and Fix Your Credit Report

Get a copy of your credit report and look for:

Errors or duplicates
Collections you can settle
Utilization rates (keep below 30%)

Use free resources like AnnualCreditReport.com.

Gather Strong Documentation

Under manual underwriting, documentation is everything. Have these ready:

2 years of tax returns
2 months of pay stubs
2 months of bank statements
Proof of rent payments

Write a Letter of Explanation

Explain any past financial hardship (e.g., job loss, medical issues) and how you’ve recovered.

Work with a Specialist Lender

Choose a lender with manual underwrite expertise and a proven track record of helping low-credit VA buyers, like Forever Home Financing.

What About the VA Funding Fee?

All VA loans (except for exempt veterans) require a VA Funding Fee. In 2025, rates remain:

2.15% for first-time use with 0% down
3.3% for subsequent uses

This fee can be rolled into your loan and should appear on your Loan Estimate and Closing Disclosure.

Check the full breakdown at VA.gov – Funding Fees.

Common Myths About Low Credit VA Loans

Myth 1: You Need a 620+ Score

False. That’s a lender overlay. The VA doesn’t set a minimum. You just need the right lender.

Myth 2: You Can’t Get Approved After Bankruptcy

False. You may be eligible just 1–2 years after discharge, depending on the type of bankruptcy.

Myth 3: Manual Underwrites Always Get Denied

False. Many low-credit VA borrowers are approved every year via manual underwriting — it just takes a lender willing to do the work.

How Long Does the Process Take?

Manual underwrites can take a little longer — typically 30 to 45 days from application to closing. Having your documents in order can help speed things up.

Real-Life Success Story

Mark, a Marine veteran with a 540 credit score, thought homeownership was out of reach. He had a few collections and missed payments from a divorce three years ago. But with steady income and 12 months of on-time rent, Forever Home Financing manually underwrote his file and closed his VA loan in 37 days.

This kind of story is more common than you think — especially in 2025.

Why Work With Forever Home Financing?

Forever Home Financing specializes in low-credit VA home loans and manual underwrites. Here’s what sets them apart:

Work with credit scores as low as 500
In-house underwriting expertise
Step-by-step guidance through the VA process
Fast closings and transparent communication

Whether you’re starting fresh or picking up where you left off, they’ll help you navigate every step.

Next Steps: How to Apply

Confirm your eligibility via VA.gov
Check your credit and gather your documents
Get pre-approved through Forever Home Financing
Start house shopping with a trusted real estate agent
Work closely with your loan officer during underwriting

Final Thoughts

Getting a VA mortgage in 2025 with a manual underwrite and low credit score is absolutely possible — especially if you have steady income, reasonable debt, and a lender who believes in second chances.

Manual underwriting gives the VA loan program its flexibility and humanity. It’s not just about numbers — it’s about the full picture.

If you’re ready to explore your options, connect with the experts at Forever Home Financing. They’ll help you turn your homeownership dream into a reality.

For more information on your rights and benefits, visit VA.gov.