Contrary to common belief, you can receive full loan approval regardless of foreclosure or bankruptcy.
In some cases (Chapter 13), an eligible recipient may in fact receive a loan even while in bankruptcy.
The Department of Veteran Affairs has established the following rules for loan approval.

VA Loan approval with Chapter 7 bankruptcy:

- The borrower must have no late payments since the bankruptcy filing.
- The borrower must have no derogatory credit (new collections) since the bankruptcy.
- The borrower must have a minimum credit score of 530-640 (the variance is based on geographic location).
- A minimum of 2 years must pass from the date of discharge.
*NOTE – in some extenuating circumstances the borrower may apply and be approved after the first year of discharge.

VA Loan approval with Chapter 13 bankruptcy:

- A minimum of 12 months must pass from the date of bankruptcy initiation.
- The borrower must maintain a satisfactory performance of the bankruptcy repayment plan.
- The borrower must have no late payments after the date of the 341 (meeting of creditors and Trustee).
- The Trustee or court must approve the acquisition of new debt.
- The borrower must have no derogatory credit (new collections) from the date of formal bankruptcy.
- The borrower must have a minimum credit score of 530-640 (the variance is based on geographic location).

VA Loan approval with Foreclosure:

- A minimum of 24 months must pass from the date of closing or Trustees sale.
- The borrower must have no late payments after the date of property transfer.
- The borrower must have no derogatory credit (new collections) from the date of foreclosure.
- The borrower must have a minimum credit score of 530-640 (the variance is based on geographic location).

VA Loan approval after a Short Sale or Short Pay Off:

- A minimum of 24 months must pass from the date of escrow closing, recordation of deed to new owner, or since last derogatory was reported to the credit bureaus.
- The borrower must have no late payments after the date of sale (closing).
- The borrower must have no derogatory credit (new collections) from the date of sale (closing).
- The borrower must have a credit score of 530-640 (the variance is based on geographic location).

These guidelines are the basis for loan approval. Each loan investor may have their own loan program overlay that may differentiate from the data herein. To learn about all VA loan program rules and to see which VA home loan is right for you, call the VA Home Loan Centers help desk at 888-573-4496.

VA loan entitlement is an amount of guarantee made by the US Department of Veteran Affairs.

The standard VA Loan Entitlement is either $36,000 or 25% of the loan amount. The $36,000 home loan entitlement is based on a loan of $144,000 or less. For VA home loans above $144,000, the VA Entitlement will be increased to 25% of the loan amount. There is a restriction on the total loan amount that is set by county or municipal boundaries. In the event that the loan amount exceeds the county loan limit, the borrower is required to place a down payment equal to 25% of the excess.

For example, if the county loan limit is $606,250 and the eligible borrower would like to obtain a loan in the amount of $620,000, the bower would have to make a down payment of $3,437.50.

$620,000 – $606,250 = $ 13,750

$13,750 x 25% = $3,437.50

The VA Loan Entitlement will vary by individual. The reason for this is that each individual will qualify for a different loan amount. The factors that will determine what an individual will qualify for are income, debts, existing VA loan entitlement use, among other things. In addition to this, the borrower must meet all underwriting criteria and originator overlays to qualify.

The VA loan entitlement maximum is $36,000 unless the loan amount is above $144,000. Because of this, a borrower may have more than one VA home loan at a time. The restriction to this is that the total of all VA loans may not exceed $144,000 unless it is one loan (and subject to either county limit or down payment restriction).

For example: A $27,500 loan will have an entitlement of $ 8,500. This will leave a VA Loan Entitlement of $27,500. Because of this, the borrower may be able to purchase a second home for up to $116,500. In this type of situation, the second home loan would not be able to be above $116,500 without a down payment.

There is no down payment required for VA loans up to $1,094,625. This is only if the loan is within the VA home loan limit.

Some Certificates of Eligibility will show 1) total entitlement, and 2) available entitlement among other data.

The VA entitlement is the actual amount (either percentage or dollar) that the VA will guarantee.

There is no credit score requirement for a VA loan. However, depending on the type of VA loan and purpose, each investor may have its own credit score overlay.  This overlay may use set guidelines but can be accepted on a case by case basis. This will also vary by state and each borrowers individual circumstances.

In some cases, credit score is not required. In other cases adjustments and exclusions can be granted. Additionally, VA Home Loan Centers has credit qualifying assistance programs and staff counselors, who can help you dispute items, rebuild your credit, settle loan balances and increase your credit score.

The statement above is for informational purposes only. To find out exactly what government insured mortgage product and amount you will qualify for, call the VA Home Loan Centers applications desk at 888-573-4496

As of October 1, 2003, the USA Patriot Act requires to collect information from borrowers to confirm their identity.

The Patriot Act requires 2 forms of identification to be collected and verified by the VA  mortgage home loan originator when an applicant applies for a VA loan.

Each piece of identification must meet an item on the list below.

Acceptable identification must meet the following requirements:

• • The identification must contain a photo of the borrower
  • The identification must contain the Borrower’s name
  • The identification must contain the Borrower’s date of birth
  • The identification must contain a street address (individuals only)
  • In the event that the individual does not have a street address, the loan originator must collect a military P.O. Box number or street address of next of kin or another contact individual.The identification must contain a Taxpayer ID Number (Social Security Number).

For non-US citizens (conscripted members of the Armed Forces) the identification must contain a taxpayer ID number, passport number with country of issuance, alien ID card number, or other foreign-issued picture ID.

It is not necessary for each piece of identification to meet all of the requirements (per id). However, all requirements must be met with a combination of identification.

Acceptable primary forms of identification are:

• • Valid Driver’s License
  • Valid State issued ID card (must include photo)
  • Military ID
  • Social Security Card
  • Passport

Acceptable secondary forms of identification are:

• • Birth Certificate
  • Current Utility Bill
  • Medicare Card
  • Student ID
  • Voters Registration
  • Tax Bill Receipt
  • Vehicle Registration
  • Credit Card

Click Here For The VA Home Loan Application 

To qualify for a VA loan, the following conditions must be met:

Borrower must be eligible to receive the VA Home Loan Benefit

Borrower must qualify for the amount borrowed – Get Started

Subject property must appraise for the loan amount

Subject property must meet the VA inspection for habitability

VA Loan Eligibility

The borrower must be active duty or have had prior military service (honorable discharge). In some situations, the surviving spouse of a Veteran and some civilians will qualify for a VA loan. For more information about VA loan eligibility, click here.

VA Loan Qualifying:

The borrowers existing monthly debt along with the proposed new debt will be deducted from the borrowers’ gross income. Although the VA (United States Veterans Administration) does not have a specific debt to income ratio, generally each investor will use 41-51% as a metric. In the event that a borrower exceeds this amount, residual income can be used instead.

VA Loan Appraisal:

Each property will be appraised by the VA. Each appraiser is chosen out of a pool of VA approved appraisers. This is done so that the borrower, seller and real estate agents may not attempt to manipulate the value of the property or the results of the VA Home Loan Appraisal.

VA Loan Inspection:

Each property is inspected by the VA appraiser for acceptable standards of safety, constructional soundness and sanitary existence. In the event that these conditions are not met, the seller may make the necessary repairs before the closing.

VA Home Loan After Foreclosure, Bankruptcy, or Short Sale.  -

VA Loans are available to borrowers with prior bankruptcy, foreclosure, or short sale. With the exception of a Chapter 13 bankruptcy, there is usually a 2 year requirement for discharge, short sale, deed recording, or action of credit report before you can be approved for a new VA loan. For a Chapter 13, you must have 12 months of payments but a discharge is not required.

How To Apply For A VA Home Loan –

To apply for a VA loan, complete the VA Home loan application here or call 888-573-4496 option 1 to speak with a VA Home Loan Centers approved loan officer. The application process will take approximately 15 minutes. The qualifications for a VA loan are more relaxed when compared to a conventional home loan.

 VA Loan Requirements -

VA Loan requirements will vary by the individual. However, a basic list of VA loan requirements can be found here.

Each borrowers circumstances are a contributing factor in the VA loan qualifications process. The statements above are for informational purposes only. To find out what government insured mortgage you will qualify for or for more information about VA loan eligibility, call the VA Home Loan Centers applications desk at 888-573-4496 option 3. 

Cash reserves are not always required to obtain VA home loan approval.  In some circumstances, acceptable levels of liquid assets may be required by the underwriter. Down payment, although not a requirement for VA loans, may be considered as a liquid asset. Other liquid assets include, checking and savings funds, IRA and investment accounts, pension funds, trust funds, mutual accounts, brokerage accounts, certificates of deposit, and other types of accounts considered acceptable by the underwriter.

If the loan amount exceeds $417,000 but is less than the loan limit set for the local municipality, a capital contribution may also be required.  These types of loans are called Jumbo VA Loans.