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How To Get A VA Loan After Bankruptcy

Get A VA Loan After Bankruptcy

Declaring bankruptcy offers a chance to reset your financial situation, eliminating the burden of hefty monthly debt repayments. However, this decision comes with a significant downside: a substantial decrease in your credit score, which can complicate efforts to secure a new home loan in the future.

For veterans who qualify, as well as active-duty service members and surviving spouses meeting specific criteria, pursuing a VA loan for home purchase post-bankruptcy presents an advantageous route. This type of loan permits financing the total purchase price of a home and may offer access to lower interest rates than typically available.

Here’s what you should understand about obtaining a VA home loan following bankruptcy.

Is It Possible to Secure a VA Home Loan Post-Bankruptcy? 

Purchasing a home following bankruptcy remains achievable, and VA loans continue to be an option for those who have undergone this financial reset. Under certain conditions, obtaining a VA loan could prove simpler than securing other types of loans (like FHA loans or conventional loans). Both active and former members of the military might still be eligible for a VA loan, though several factors will influence this possibility:

  • The category of bankruptcy filed
  • The underlying reasons for the bankruptcy filing
  • Your capability to fulfill the standard eligibility criteria for a VA loan Consulting with your lender is the most prudent step to take. They can provide detailed guidance on the prerequisites for qualifying for a VA loan post-bankruptcy.

Understanding the VA Loan Waiting Period After Bankruptcy 

For individuals considering a VA loan after bankruptcy, there is an obligatory “waiting period” that varies depending on the type of bankruptcy filed. For those who have gone through Chapter 13 bankruptcy, you can immediately begin the process of applying for a VA loan, though it may be wise to first focus on rebuilding your credit. In contrast, a Chapter 7 bankruptcy necessitates a waiting period of up to two years before one can apply for a VA loan.

The key distinction between Chapter 7 and Chapter 13 bankruptcy lies in the treatment of assets and the timeline for mortgage loan eligibility post-bankruptcy.

Chapter 7 Bankruptcy 

This form of bankruptcy allows individuals (or businesses) to liquidate assets to clear debts. After asset liquidation and debt discharge, filers can start anew financially. However, Chapter 7 has its drawbacks, including:

  • The inability to retain significant assets such as homes, vehicles, and some personal possessions.
  • The impossibility of negotiating with lenders and creditors to catch up on overdue payments.

Chapter 13 Bankruptcy 

Often referred to as “reorganization bankruptcy,” Chapter 13 enables filers to devise a repayment plan to retain their assets. Working alongside a bankruptcy attorney and the court, a repayment scheme typically spans 3 to 5 years. Upon completion, any residual debt is wiped clean.

Chapter 13 may be preferable for those ineligible for Chapter 7 and capable of repaying a portion of their debts. It allows for asset retention and removes the bankruptcy from credit reports after seven years. Nonetheless, it’s important to consider the challenges, including:

  • More difficulty qualifying for new loans, including VA home loans, compared to not filing bankruptcy.
  • The requirement to allocate income towards living expenses and mandated debt repayments.
  • The obligation to continue payments until debts are fully settled.

Foreclosure Considerations 

While not directly a bankruptcy form, foreclosure frequently accompanies bankruptcy due to mortgage non-payment. Experiencing both bankruptcy and foreclosure doesn’t automatically disqualify one from obtaining a VA loan. Yet, additional documentation, such as a detailed explanation letter, may be necessary, particularly if foreclosure occurred as part of bankruptcy proceedings.

It’s crucial to consult with a lender, especially if previous foreclosures involved a VA loan, as this might affect the ability to utilize full VA entitlement benefits. Engaging in conversation with your lender about past bankruptcies during the loan application phase is advisable for clarity on your financial standing.

Securing a VA Loan After Bankruptcy: A Guide

Gaining approval for a VA loan following a bankruptcy filing is indeed feasible, though the process and requirements differ from your initial loan application. The specifics hinge on the bankruptcy type you’ve filed.

Navigating Chapter 7 Bankruptcy Towards a VA Loan Achieving eligibility for a VA home loan post-Chapter 7 bankruptcy involves meeting certain criteria:

  • A waiting period of at least two years post-debt discharge is mandatory.
  • Your financial history should ideally show no late payments or new collections accounts since the bankruptcy concluded.
  • For consideration by most lenders, a credit score minimum of 580 is required for standard VA loans, and 640 for VA jumbo loans.

Bear in mind, requirements can vary across lenders, so consulting with a loan specialist is crucial for a clear understanding of your financing options.

Chapter 13 Bankruptcy and VA Loan Eligibility Filing for Chapter 13 bankruptcy allows for an earlier application for a VA loan compared to Chapter 7. To qualify, you’ll need to adhere to the following:

  • Ensure your bankruptcy has been either discharged or dismissed prior to mortgage application.
  • Be prepared to discuss any late payments occurring within 12 months of applying.
  • A credit score of at least 580 is necessary for standard VA loans, and 640 for jumbo options.
  • It’s important to note that lender-specific criteria may apply, so early dialogue with your lender is advised.

Enhancing Approval Odds During the Bankruptcy Waiting Period The mandatory waiting period post-bankruptcy is an opportunity to bolster your creditworthiness. Regardless of bankruptcy, a healthy credit score is beneficial for securing favorable mortgage interest rates. Here are strategies to improve your credit score:

  • Ensure timely payment of all debts.
  • Aim to reduce outstanding debt and minimize your debt-to-income ratio (DTI).
  • Maintain a credit utilization rate below 30%.
  • Regularly review your credit report for inaccuracies.
  • Limit new credit inquiries and applications.


Homeownership post-bankruptcy is a viable goal, especially for qualifying veterans, active-duty service members, and surviving spouses who meet specific criteria. While a waiting period exists before applying for a new mortgage, many find that a VA home loan offers a smoother path to homeownership than other loan types.

For those looking to embark on their home buying journey post-bankruptcy, beginning your mortgage application with Elevation Mortgage could be your next step towards securing a new home.


Picture of Reed Letson

Reed Letson

Reed offers two decades of expertise as a mortgage broker, focusing on veterans and first-time home buyers. With a strong grasp of real estate and mortgage markets, he empowers clients with practical insights. Reed's passion is guiding clients to build wealth through real estate investments and financing solutions.

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