Getting a VA Loan After Bankruptcy or Foreclosure

VA loans often carry shorter “seasoning periods” following these negative financial events. Qualified VA Loan buyers may be able to get into a home just a couple years removed from a bankruptcy or foreclosure. In some cases, there may be no wait at all.

Even foreclosure on a VA loan doesn’t automatically mean another is out of the question.

To be sure, most prospective buyers will need to spend time repairing their credit and finances. A home purchase in the wake of one of these events might not sense for every consumer.

But for veterans and military members who want to move forward, here’s a closer look at the typical waiting game.


Veterans who file a Chapter 7 bankruptcy can be eligible for a VA loan once they’re two years beyond their discharge date. With a Chapter 13 bankruptcy, which is more about restructuring debt than erasing it, qualified buyers may be able to obtain a VA loan just one year removed from the filing date.

Chapter 13 filers will often need permission to take on new debt like a mortgage. They’ll also typically need a spotless payment history over those 12 months leading up to applying for a loan.

For comparison’s sake, conventional loans typically require a four-year wait following a Chapter 7 bankruptcy discharge and two years after a Chapter 13 discharge.

Remember, too, that a bankruptcy can crush your credit. Depending on what kind of credit you had before the bankruptcy, your score could dip anywhere from 130 to 240 points, according to credit score firm FICO.


VA buyers can be eligible for a loan two years removed from a foreclosure or a deed in lieu of foreclosure. Some lenders have no waiting period following most short sales.

Conventional borrowers usually need to wait seven years from a foreclosure and four years following a short sale.

One area that can trip up VA buyers is if their foreclosure occurred on an FHA loan. Defaulting on federal debt can trigger a mandatory three-year wait before you can obtain another government-backed loan.

A foreclosure can knock anywhere from 85 to 160 points from your credit score, according to FICO.

Bankruptcy and Foreclosure

Some homeowners experience both of these, usually a bankruptcy filing with foreclosure following months or even years later. The concern is that you’ll get hit with another seasoning period because of that later foreclosure.

That isn’t the case for many VA buyers, although policies and requirements can vary by lender.




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This article was written by Chris Birk, Director of Education at Veterans United Home Loans and author of “The Book on VA Loans: An Essential Guide to Maximizing Your Home Loan Benefits.”

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