Getting A VA Loan After A Bankruptcy
Qualifying for a VA home loan approval after a bankruptcy or foreclosure is never easy. As a U.S veteran or Service Member, there are a few options at your disposal. Unfortunately, if you’ve been hit with financial difficulties in the past, many of those doors will be closed. Thankfully, after your discharge date or, the so-called seasoning period, gaining back your eligibility for your VA home loan benefits after bankruptcy is still possible with a VA approved lender like HomePromise.
In this post, you will learn all you need to know about getting your dream of buying a home (or refinancing it) back on track. A new and exciting chapter awaits.
What Are VA Mortgage Loans?
The VA mortgage loan is operated by the United States Department of Veterans Affairs (otherwise known as the VA) a government agency that has been around since the 1940s, although amendments have naturally been made over the years. It is designed to help veterans, serving military members, and eligible spouses with their property purchases by supplying financing programs that do not require a down payment.
Eligible applicants can use the VA program to buy a variety of property types including single family homes, condominiums, and multi-unit properties. The program offers up to 100% financing and has been utilized by hundreds of thousands of veterans over the years.
Essentially, if you have a military background, the VA loan program is one to look at when looking to buy a home – regardless of personal circumstances.
Can You Get Another VA Loan After a Bankruptcy?
There’s no escaping the fact that a past bankruptcy will harm your financial health in several ways. While there are many other contributing aspects to consider, FICO credit score studies show that bankruptcy can see your credit score drop by an average of 240 points while foreclosures bring damage of 120 points. This can reduce your options in a host of situations, especially when it comes to financing a property purchase or refinance.
Many traditional forms of borrowing will be out-of-bounds while even VA loans can be difficult to acquire. While the situation is certainly painful, the VA loans route may still be open.
To get a VA loan, there are a number of requirements that must be satisfied even if you haven’t faced those past financial problems. When bankruptcy comes into the equation, the situation will be influenced by the type of bankruptcy that was filed.
If it was a Chapter 7 bankruptcy, you’ll have to wait two years after discharge before applying for a VA loan. Moreover, you’ll need to compose a full explanation of why the bankruptcy happened and show that you now have financial stability. While the credit score doesn’t need to be perfect, showing that the damage has been repaired is important too. But, in some cases, a VA loan can be made if you had a bankruptcy only one year ago. The reason for the bankruptcy will influence whether this is possible. If it can be shown that your bankruptcy was due to extenuating circumstances beyond your control then some VA lenders may approve you for a VA loan even with a Chapter 7 bankruptcy discharged one year ago.
For Chapter 13 bankruptcy cases, you’ll still need to give a full explanation of the situation. However, rather than waiting two years from discharge, there is no waiting period on a Chapter 13 bankruptcy after discharge.
Once those stipulations are satisfied, there’s every chance that you will be accepted for a VA loan. In turn, this gives you the same opportunities as every other veteran, which is what you deserve after serving your country. Assuming the application is handled in the right way by a competent VA lender, you could be in your new home far sooner than you ever thought possible.
What Can You Do To Prepare To Get A VA Loan?
If the prospect of applying for a VA loan is on your agenda, there are several steps that can help as you approach the horizon. This checklist should help greatly:
- Get your free annual credit report.
- Make sure any inaccurate or outdated details are corrected.
- Stay on top of your monthly bills between now and your loan application.
- Try to avoid making additional purchases on credit.
- Prove that you are now in a stable position by accumulating some savings.
Do each of those things, and your hopes of getting a VA loan after bankruptcy will look better than ever. Aside from helping with the Chapter 7 or Chapter 13 bankruptcy situations, it generally puts you in a stronger position for your loan application.
Getting Your VA Loan
Preparing for a VA loan is one thing, but actively applying for it in the best manner is another altogether. There are many questions that need answering but finding the best VA lender to make those homeownership dreams a reality is undoubtedly top of the list.
Before applying for the loan, you need to choose a VA lender that can help you receive the VA mortgage you need. Opting for one that will make you wait for 3, 4 or 5 years after discharge, simply won’t do. Meanwhile, you’ll want a lender that is backed by the government VA program as well as one that can secure the lowest interest rates.
Fast convenient service is always advantageous while knowing that your data is protected throughout the process should play an important role too. Perhaps most importantly, though, you need to know that the application is supported by a team of experts that can help you through every stage, including offer support regarding bankruptcy recovery.
With HomePromise, you’re guaranteed to receive all of the above as well as a tailored service from a team that understands your situation. As a veteran and a former bankruptcy sufferer, we have your best interests at heart. With free estimates and no upfront fees, ours is the only service you’ll need for getting your VA loan. That’s true whether you’ve had financial difficulties or not.
Even with the best of intentions, bills can start to pile up. From unexpected medical bills to high interest credit cards, debt can happen to anyone. Other expenses like college tuition, delinquent taxes, and second mortgages can also cause financial stress. For veterans and military families currently experiencing financial difficulties, VA military debt consolidation loans can help.