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A bankruptcy can be a devastating experience. However, it doesn’t need to derail your dreams of owning a home. Even better, it does not have to prevent you from obtaining a VA loan.

You can still qualify for a VA loan after bankruptcy. In fact, it may be a little easier for military members to bounce back and become eligible for a VA loan sooner than most borrowers. The application process however, may require a few additional steps. 

Types of bankruptcy  

Overall, VA loan borrowers may be able to get into a home in as little as one year after filing for bankruptcy. The waiting period will vary based on the type of bankruptcy. 

Chapter 7 bankruptcy:  

The VA generally requires that a borrower wait a minimum of two years from the discharge date of the bankruptcy. Good credit must be established (VA lenders typically look for a credit score of at least 620), a full explanation of the bankruptcy must be provided, and proof of a stable income/job must be supplied.

Chapter 13 bankruptcy:

In this case, borrowers may still apply and even receive approval for a VA loan while paying on a Chapter 13 bankruptcy. The VA requires that the borrower have made their bankruptcy payments for at least one year in order to qualify. As with Chapter 7, good credit must be established, a full explanation of the bankruptcy provided, and proof of a stable income/job supplied.

Foreclosure on a VA loan:

Many veterans are under the impression that having a VA loan foreclosed on means they’ve lost access to their benefits. This is simply not correct. Those homebuyers who have defaulted on a VA loan may still be able to obtain another VA Loan. 

Steps to take to increase your loan eligibility

For those who have filed for bankruptcy and are applying for a VA loan, it’s important to take some key steps while you are in the “waiting period” for loan eligibility. That includes ensuring that bills are being paid on time (late payments can mean a delay in your application process). It is also recommended that you check your credit report to ensure there are no inaccuracies and/or things that you may want to dispute.  

It is wise to speak with a home loan specialist for more details. The important thing to remember is that a bankruptcy or a foreclosure doesn’t have to deter you from your home buying goals. Call us at 877-220-5533.


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